Trial Lawyers Expecting Treasury Department To Give Them $1.6 Billion Tax Break

[mrjarrell]

I guess when you're a protected class and have one of the strongest lobbying arms in the world you don't have to do things like go through congress to get your tax breaks.

via Say Anything

First question: How is it that the Treasury Department can go ahead and give the trial lawyers a tax break that Congress didn’t pass? Second question: Why on earth would we want to give a tax break to trial lawyers for filing speculative lawsuits? It would, in fact, be a subsidy for lawsuits not unlike the mortgage deduction on your income tax is a subsidy for home ownership. That mortgage deduction is one of the chief reasons why our country has had troubles with housing bubbles (unlike Canada which has no such tax deduction).
Can you imagine what a tax-subsidized lawsuit bubble would do to our economy? If anything, we need tort reform in this country to reduce the number of lawsuits filed every year. Not subsidies that will make it cheaper and easier to file lawsuits.

VANCOUVER, Canada (Legal Newsline) – The nation’s trial lawyer group, the American Association for Justice, revealed Tuesday that it expects the U.S. Department of Treasury to soon give its members a tax break on contingency fee lawsuits.
The tax break could be similar to proposed legislation that didn’t make it through Congress last year. That proposal, sponsored by U.S. Sen. Arlen Specter, D-Pa., would have allowed attorneys to deduct fees and expenses up-front for filing contingency fee lawsuits.
John Bowman, the Director of Federal Relations for the AAJ, said in response to a question from a state delegate regarding recruiting new members that an administrative order from the Treasury Department could come as soon as tomorrow, sources told Legal Newsline.
​

So, basically, our elected representatives didn’t pass this tax break but the trial lawyers are expecting to get it anyway through the actions of the unelected bureaucrats at the Treasury Department.

More at the source.

 

[Lex Concord]

I guess when you're a protected class and have one of the strongest lobbying arms in the world you don't have to do things like go through congress to get your tax breaks.

via Say Anything

More at the source.

I look forward to reading the article but this tripe from the snippet you quoted jumped out at me like it was in 3D:

That mortgage deduction is one of the chief reasons why our country has had troubles with housing bubbles (unlike Canada which has no such tax deduction).

Right...the Federal Reserve has nothing to do with it. Pay no attention to the Chairman behind the curtain. No one in congress pushes laws encouraging loan application acceptance for those not worthy risks.

Washington is to blame, but this clown falls far short of the mark in this regard.

 

[CarmelHP]

How is a timing rule change a subsidy? Now, being allowed to keep your money instead of having it taxed away is a subsidy. What rot.

 

[jdhaines]

One thing to keep in mind is that among congressmen, lawyers are the best represented as far as occupation before congress...I realize this isn't a congressional thing, but it's no wonder why they have the lobbying power.

 

[downzero]

How is a timing rule change a subsidy? Now, being allowed to keep your money instead of having it taxed away is a subsidy. What rot.

So a deduction isn't a subsidy?

Without it, you'd be paying the tax. It's refund, or a reduction in taxable income to which you otherwise wouldn't be entitled.

How is that NOT a subsidy?

Really, I'm all ears this time. A tax break isn't a subsidy now?

 

[CarmelHP]

So a deduction isn't a subsidy?

Without it, you'd be paying the tax. It's refund, or a reduction in taxable income to which you otherwise wouldn't be entitled.

How is that NOT a subsidy?

Really, I'm all ears this time. A tax break isn't a subsidy now?

Sending you money that was never yours to begin with is a subsidy. Not taxing you and taking as much as they otherwise would is NOT a subsidy. The difference is night and day. And this is merely a timing change, expenses would be deductible in the period in which they were incurred rather than at the resolution of the lawsuit as they are now.

 

[downzero]

Sending you money that was never yours to begin with is a subsidy. Not taxing you and taking as much as they otherwise would is NOT a subsidy. The difference is night and day. And this is merely a timing change, expenses would be deductible in the period in which they were incurred rather than at the resolution of the lawsuit as they are now.

I see your point in principle, but the fact of the matter is that we live in a society of taxes. Giving you a break on your taxes IS a subsidy because repealing the deduction would result in you owing more taxes.

I understand what you're saying about this merely being an accounting change rather than a legitimate change of tax policy, however.