Litigation Funding Tax Taken Out of the One Big Beautiful Bill

Insurance industry groups and insurers — along with other industries and groups — want something done for the disease called third-party litigation. Critics say the litigation funding industry — and it is an industry, and one that includes foreign “investors” — isn’t being taxed enough. These “businesses” and “investors” are driving lawsuits that end up costing a number of industries, individual businesses and individuals, billions every year in nuclear and thermonuclear verdicts.

The One Big Beautiful Bill originally had language that would tax third-party litigators at a rate of almost 41%. To the disappointment of the insurance industry, and others, it was deleted from the bill by the Senate Parliamentarian who declared it violated some budget rules.

National Association of Mutual Insurance Companies (NAMIC) senior vice president of federal and political affairs, Jimi Grande said that decision is a huge disappointment.

“Due to some misinformation, partisanship, and efforts of those who profit off the U.S. court system, the Senate Parliamentarian decided to rule against the closing of the tax loophole, which led to its removal from the OBBB,” Grande said. “Keeping this foreign funder loophole open means additional billions will fuel legal system abuse, and these foreign entities will continue paying nothing in U.S. taxes. American citizens will keep footing the bill as trial lawyers and litigation funders are incentivized to keep doing business as usual, contributing to a more litigious society and out of control tort costs impacting nearly the entire economy.”

The Triple-I — the Insurance Information Institute — says the legal system abuse by these third-party bandits cost each American family over $6,664 per year for goods and services. Small businesses are hit for $160 billion a year in tort costs.

Source link: Insurance Journal — https://bit.ly/3U5PecQ