Senator Hassan Cosponsors Bill to Close Loophole that Gives Tax Breaks for Corporate Misconduct
WASHINGTON – Last week, Senator Maggie Hassan cosponsored the No Tax Write-Offs for Corporate Wrongdoers Act to close a tax loophole that allows corporations to write off the punishment they receive for egregious wrongdoing as an “ordinary” business expense.
Punitive damages are imposed rarely, and only on bad actors whose reckless misconduct resulted in extreme consequences – and usually great harm to peoples’ lives. Such damages are intended to impose a punishment on the wrongdoer so that more responsible decisions will be made in the future. But enabling corporations to deduct these damages lessens the deterrent effect of that punishment, which is what this measure seeks to address.
“Our top priority in reforming our tax code should be ensuring that hard-working Granite Staters and families across this country have what they need to get ahead and stay ahead, not rewarding big corporations for wrongdoing and misconduct,” Senator Hassan said. “The No Tax Write-Offs for Corporate Wrongdoers Act is a common-sense measure to hold big corporations responsible for misconduct accountable, while putting middle class Granite Staters and Americans first.”
Corporate bad actors have been hit with punitive damages and penalties for causing tragic disasters such as the 1989 Exxon Valdez oil spill, which devastated Alaska’s southern coast; the 2010 explosion at Big Branch mine in West Virginia that claimed the lives of 29 miners; and the 2010 Deepwater Horizon rig explosion in the Gulf of Mexico that claimed 11 lives and led to the worst oil spill in U.S. history. But thanks to the existing loophole, these corporations were lawfully able to deduct these punitive damages and penalties as a mere cost of doing business.
The Joint Committee on Taxation has estimated that closing the punitive damages loophole could increase federal revenues by $415 million over 10 years. Senator Patrick Leahy (D-VT) introduced the bill and other cosponsors include, Senators Richard Blumenthal (D-CT), Jack Reed (D-RI), and Kirsten Gillibrand (D-NY).
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