Republicans question trial lawyer tax cut

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Ranking Republicans in the House Ways and Means and Senate Finance committee asked the Treasury Department for clarification on a change in tax policy that could underwrite frivolous lawsuits.

Assistant Secretary for Tax Policy Michael Mundaca had confirmed last week that the Treasury department is considering granting trial lawyers a tax break that could cost the federal government $1.52 billion over 10 years.

The joint letter from Minnesota Congressman Dave Camp and Iowa Senator Chuck Grassley urged the department “not to make such changes in the government’s enforcement of the tax laws, absent a clear direction from Congress or to comply with court decisions.”

Lisa Rickard, president of the U.S. Chamber Institute for Legal Reform voiced her support for the letter and stated:

“For the past three years, the trial lawyer lobby has been pushing Congress to enact a $1.6 billion tax cut for plaintiffs’ lawyers that would increase abusive litigation and add to the deficit. With support in Congress woefully lacking, the trial bar is trying to circumvent our elected representatives and get Treasury to enact their special interest tax break by fiat.
“At a time of high unemployment and record deficits, Washington should be working to put Americans back to work, not increase the deficit while subsidizing frivolous lawsuits. I applaud Senator Grassley and Congressman Camp for questioning this brazen end run around our democratic process.”

The policy in question currently forbids lawyers from deducting loans to clients as a business expense.

This is not the first time this change has been sought.  A 2009 Times editorial noted that measures granting tax breaks to lawyers are unpopular, and must be sought by alternative means - either by embedding the changes in larger bills, or in this case, acting internally within the Treasury Department.

See another Times editorial from 2010 here.

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J Bloom

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