Leahy Calls On Congress To Close Tax Loophole For Corporate Misconduct
Amendment To Pending Energy Bill Would Eliminate Tax Loopholes For Big Corporations Paying Punitive Damages
WASHINGTON (Wednesday, February 3, 2016) – Senate Judiciary Committee Ranking Member Patrick Leahy (D-Vt.) on Wednesday introduced an amendment to the pending energy bill on the Senate floor to close a tax loophole that allows businesses to write off the punishment they receive for corporate wrongdoing as an ordinary business expense.
The amendment is an identical version to the No Tax Write-Offs for Corporate Wrongdoers Act, legislation Leahy introduced last year to enforce a commonsense fix to eliminate tax breaks for corporate misconduct.
“Punitive damage awards are designed to punish wrongdoers for the reprehensible harm that they cause and to deter would-be bad actors from repeating similar mistakes. Today, a company can simply hire a team of lawyers and accountants to deduct this punishment from the taxes the company owes,” Leahy said. “Vermonters and Americans are tired of seeing giant corporations getting special treatment under the law—and paying for their reckless mistakes. American taxpayers should no longer have to subsidize corporate misconduct.”
The energy sector has been plagued with companies that have recklessly destroyed environments and harmed communities with impunity. In 1994, a jury awarded $5 billion in punitive damages against Exxon for the Valdez spill in Alaska. Exxon fought these damages in the courts for 14 years, successfully bringing the damages down to $500 million. Exxon then used the Federal tax code to write-off its punitive damages as nothing more than an “ordinary” business expense.
“For the victims who have already paid the price for extreme corporate misconduct, there is nothing ‘ordinary’ about this at all. It is simply wrong. It offends our most basic notions of justice and fair play,” Leahy said.
The Obama administration has requested eliminating this tax deduction in its budget proposals. Both the Joint Committee on Taxation and the Obama Administration have estimated that ending this deduction loophole will result in more than $400 million of increased revenues over 10 years.
Text of the amendment is available online.
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David Carle: 202-224-3693
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