COCHRAN, WICKER AIR CONCERNS OVER TAX BREAKS FOR TRIAL LAWYERS
Senators Say Possible Treasury Dept. Move Would Circumvent Congress, Add to Deficit
WASHINGTON, D. C. –U.S. Senators Thad Cochran and Roger Wicker (R-Miss.) today aired their concerns about the possibility that the U.S. Treasury Department is planning to provide tax breaks for trial lawyers without congressional action.
Cochran and Wicker were among 24 Senators who today sent a letter to Treasury Secretary Timothy Geithner to express concern over reports about the tax breaks for trial lawyers and to request more information on these efforts.
“I cannot understand the rationale behind offering tax breaks to trial lawyers when dialogue among some Democrats in Washington has turned to which Americans should have their taxes increased,” Cochran said.
“It is alarming that the administration is considering bypassing the legislative process to deliver a special deal for trial lawyers just months before an election,” said Wicker. “The administration should be focused on creating jobs, reducing the deficit, and restoring the economy, not working on potential tax breaks for trial lawyers.”
The letter was prompted by recent reports that the Treasury Department is considering a policy change that would allow trial lawyers to deduct expenses and court costs in the year in which they were incurred, which could cost the government up to $1.6 billion. Current law stipulates that expenses related to ongoing lawsuits can only be deducted in the year in which a case is decided.
“We have serious concerns about this proposal which could add $1.6 billion to our already exploding national debt. We believe that this targeted tax break will do nothing to spur economic growth or job creation. Instead, it would only further provide incentives for contingency fee lawsuits which raise prices for consumers and decrease employment,” the letter to Geithner states.
In the letter, Senators also point out that strong public opposition has stopped the Senate and House tax-writing committees from considering legislation to authorize similar tax favors for trial lawyers.
The letter, led by Senator John Thune (R-S.D.), was signed by Senators Alexander, Barrasso, Bond, Bunning, Burr, Chambliss, Coburn, Cochran, DeMint, Ensign, Enzi, Gregg, Hatch, Inhofe, Isakson, Kyl, Lugar, McCain, McConnell, Roberts, Vitter, Voinovich, and Wicker.
The following is the text of the letter to Geithner:
July 29, 2010
Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220
Dear Secretary Geithner:
We are writing to express our concern about possible Treasury actions to provide a new tax break for trial lawyers and to request more information on this proposed change.
As you may know, a number of recent reports have suggested that the Treasury Department is considering a policy change that would allow trial lawyers to deduct expenses and court costs in the year in which they were incurred. We have serious concerns about this proposal which could add $1.6 billion to our already exploding national debt. We believe that this targeted tax break will do nothing to spur economic growth or job creation. Instead, it would only further provide incentives for contingency fee lawsuits which raise prices for consumers and decrease employment.
We are also very concerned that this proposal may be moving through without any scrutiny. Bills which would have a similar effect have been introduced in both the U.S. House of Representatives and the U.S. Senate. However, neither the Ways and Means Committee nor the Finance Committee has held a hearing on these bills due to the significant opposition that they face. Additionally, this proposal was not mentioned in the Treasury’s Department’s annual “Green Book.”
We respectfully request that you inform us if you are in fact considering this policy change, and if so, when you expect to implement it and what the costs to taxpayers would be. Thank you for your consideration of this request.
Senator Thad Cochran Press Release