Justinian C. Lane, Esq.
Let Justice Be Done, Though the Heavens May Fall
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Justinian Lane's Blog

Justinian's Blog

No More Tax Break on Punitive Damages?

My news letter from RDBLaw.com arrived in my inbox this morning, and carried this little tidbit:

Senate Bill Seeks To Abolish Tax Deduction For Punitive Damage Judgments

Corporations would be prohibited from deducting punitive damages award payments from their taxes under Senate tax bill - "The Jumpstart Our Business Strength Act, S.1637." Business Insurance reports that the bill includes tax incentives that business likes, but the provision abolishing deductions for punitive damages has generated considerable controversy within the business community. According to Business Insurance, policy experts and congressional observers believe that legislators ultimately may remove the punitive damages language because of the claimed adverse effect on businesses who have historically relied on the deduction.

Of course, since this is to "Jumpstart Our Business Strength", I'm sure they'll yank this out. But, I certainly think it would be a damned fine idea to disallow tax deductions on punitive damages.

What I found most disturbing was the last part of the last sentence: "businesses who have historically relied on the deduction." Isn't there a problem if a business relies upon this? My thinking here is that a more massive award of punitive damages against those businesses might actually get them to clean up their acts.

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