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Democrats have included a tax break for trial lawyers in their multi-trillion-dollar socialist tax and spend bill. As noted by the Wall Street Journal editorial board, this provision would subsidize contingency fee cases and allow trial lawyers to launch frivolous lawsuits and drag out cases against businesses.
Currently, trial lawyers front these costs in return for a share of the client’s settlement or award. If they do not win the case or settle, trial lawyers can already write off the costs they fronted.
The provision included in the Democrats’ reconciliation bill would allow trial attorneys to deduct contingency-fee expenses including costs spent on depositions, discovery, expert testimonies, and more. According to the Joint Committee on Taxation (JCT), this provision would cost $2.5 billion over 10 years.
As noted by the WSJ, this will incentivize trial lawyers to drag out cases and launch frivolous new lawsuits with the confidence that they will receive a tax break:
“By reducing trial lawyers’ legal costs, it would effectively subsidize contingency-fee cases. Lawyers will be more likely to file dubious lawsuits and drag out cases if they can immediately deduct their expenses. This is a direct income transfer to plaintiffs’ lawyers, who will turn around and finance Democratic election campaigns. It’s the definition of a corrupt political bargain.”
Nearly 95 percent of lawyers’ political donations go to Democrats. The top trial lawyer lobby, the American Association for Justice, directs over 97 percent of its political contributions to Democrats.
This is just one of many giveaways Democrats have included in their mammoth multi-trillion tax and spending bill. Democrats have also included provisions for their other favored special interests including big labor, green energy, and the media:
- The bill includes a massive $12,500 tax credit for electric vehicles. However, the bill dictates that in order to receive $4,500 of the $12,500 electric vehicle credit, an EV must be union-made.
- The bill also includes an above-the-line deduction for up to $250 in “dues” to a labor organization, including the portion of “dues” directed to political campaign spending. This is a conflict of interest as Big Labor gives most of its political contributions to Democrats and progressive causes.
- The legislation includes a credit equal to 30 percent of the cost of an electric bicycle. It allows up to $3,000 of the cost of an “e-bike” to be taken into account for the credit, creating a credit of $900 for individuals. E-bikes costing as much as $4,000 would be eligible for the credit. The bill would allow for a married couple earning $150,000 to buy two new electric bikes every year and claim up to $7,200 in e-bike credits.
- The plan includes multi-billion-dollar grants and credits for the promotion of “environmental justice,” and the “green workforce.”
- The bill even includes a tax giveaway to reporters. The proposal creates a tax credit for up to 1,500 employees per media company – including television and radio broadcasters, news websites and newspaper chains. It gives an employment tax credit of up to $12,500 per person for reporters at “eligible” media companies. In addition to the conflict of interest created by giving reporters a special tax carveout, large media companies will get an enormous tax cut. As reported by the Associated Press: “Gannett, one of the nation’s largest remaining newspaper chains, could gain as much as $127.5 million over five years, according to an analysis by the AP.”
Unfortunately, Democrats have used their reconciliation bill as a massive payout to left wing special interests. Lawmakers should reject this bill and all its shameless giveaways.