Leahy Calls On Congress To Close Tax Loophole For Corporate Misconduct
“No Tax Write-Offs for Corporate Wrongdoers Act” Will Eliminate Loopholes For Big Businesses Paying Punitive Damages
WASHINGTON (Tuesday, January 13, 2015) – Senate Judiciary Committee Ranking Member Patrick Leahy (D-Vt.) on Tuesday introduced legislation to close a tax loophole that allows businesses to write off the punishment they receive for corporate wrongdoing as an ordinary business expense. The No Tax Write-Offs for Corporate Wrongdoers Act provides a commonsense fix to eliminate this tax break for corporate misconduct.
“Under current law, a corporation or individual business owner may deduct the cost of court-ordered punitive damages as an ‘ordinary’ business expense. For the victims of corporate wrongdoing, there is nothing ordinary about this,” Leahy said. “This tax loophole allows corporations to wreak havoc and then write it off as a cost of doing business. That undermines the whole point of punitive damages.”
Leahy introduced his legislation as the Senate considers a measure to approve construction of the Keystone XL Pipeline. The existing Keystone pipeline has spilled 12 times, and while proponents of expanding this pipeline assure its safety, its construction poses significant environmental and safety risks to the communities and families who would be affected by its construction. In the event of yet another spill, Leahy said the proper measures should be in place to ensure corporate accountability.
“I do not support Congress bypassing the environmental appeal process to fast-track further construction of the Keystone pipeline, which poses considerable safety and environmental risks,” Leahy said. “But anyone who does want this pipeline should at a minimum consider the communities and families who would be affected by its construction, and in the event of a spill, they should make sure tax payers are not subsidizing the damage. This speaks to our basic notions of justice and fair play.”
The Obama administration requested eliminating this tax deduction in its 2014 budget proposal. The Joint Committee on Taxation has estimated that ending this deduction loophole will result in increased revenues of $355 million over 10 years. Leahy offered similar legislation in 2011 in the wake of the Big Branch mine explosion in West Virginia and the explosion on the Deepwater Horizon drilling rig in the Gulf of Mexico, both which led to tragic losses of life.
A copy of the bill is available online.
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David Carle: 202-224-3693
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