Trial Lawyers Set To Receive Enormous Tax Break

From The American Thinker;

July 15, 2010


Trial lawyers in line for $1.6 billion tax break

Rick Moran



As the Democrats rail against Republicans for favoring the "rich" by wanting to make the Bush tax cuts permanent, the Obama administration is about to grant one of their favored and most favorite constituencies a huge tax break - without all that messy democracy stuff getting in the way:



David Freddoso:





But even in this context, the Obama administration may be on the verge of giving wealthy trial lawyers a special interest tax break worth $1.6 billion. Legal Newsline reports that AAJ's top lobbyist, John Bowman, told the group's annual convention in Vancouver, Canada yesterday that the IRS will make the change administratively in order to avoid a vote in Congress. He also warned attendees that Treasury Department officials had warned him to keep the information quiet.

This story is a testament to the plaintiff lawyers' lobby and the influence it holds with the Obama White House and the Democratic Party. When AAJ members held a major fundraiser this week at the AAJ convention in Vancouver, Canada, ten Democratic U.S. Senate candidates took breaks from their campaigns to attend.



Trial lawyers and their main trade group, the American Association for Justice (AAJ), have pushed for a special tax break that allows them to deduct litigation costs in the same year they invest in contingency lawsuits. Legally, such costs are considered loans to clients, and the IRS does not allow them to be deducted until the case ends either with success and a fee from a judgment or settlement, or with failure and a loan default. The loan arrangement springs in part from the fact that most states consider it unethical or even illegal for lawyers to fund their clients' lawsuits, a practice known in common law as "champerty."



Unlike many of AAJ's other agenda items (expansion of work discrimination suits and an end to pre-emption in medical device cases, for example), the tax break would apply to nearly every plaintiffs' lawyer in America, and is valued at nearly $1.6 billion. AAJ, which recently suffered a 33 percent drop in membership dues collection between 2005 and 2008, views this line of advocacy as a recruitment tool. Last year, speaking before AAJ's covention, the group's then-chief lobbyist, who is now its CEO, said that Democrats in Congress might push the provision through by attaching it to unrelated legislation.



Don't worry fellas - we'll keep it under our hats. Not a word to the taxpayer who might raise an eyebrow about the $1.6 billion going to people who hardly need it but might want to find someone to hold responsible for the idea that Obama and the Democrats - even with a huge majority in both Houses of Congress - doesn't want anyone going on the record supporting this boondoggle.



Cowards as well as spendthrifts.







Hat Tip: Ed Lasky











Posted at 09:06 AM