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Full-Text Articles in Law
Taxing Punitive Damages, Gregg D. Polsky, Dan Markel
Taxing Punitive Damages, Gregg D. Polsky, Dan Markel
Scholarly Works
There is a curious anomaly in the law of punitive damages. Jurors assess punitive damages in the amount that they believe will best “punish” the defendant. But, in fact, defendants are not always punished to the degree that the jury intends. Under the Internal Revenue Code, punitive damages paid by business defendants are tax deductible and, as a result, these defendants often pay (in real dollars) far less than the jury believes they deserve to pay.
To solve this problem of under-punishment, many scholars and policymakers, including President Obama, have proposed making punitive damages nondeductible in all cases. In our …
Taxing Structured Settlements, Brant J. Hellwig, Gregg D. Polsky
Taxing Structured Settlements, Brant J. Hellwig, Gregg D. Polsky
Faculty Publications
Congress has granted a tax subsidy to physically injured tort plaintiffs who enter into structured settlements. The subsidy allows these plaintiffs to exempt the investment yield imbedded within the structured settlement from federal income taxation. The apparent purpose of the subsidy is to encourage physically injured plaintiffs to invest, rather than presently consume, their litigation recoveries. Although the statutory subsidy by its terms is available only to physically injured tort plaintiffs, a growing structured settlement industry now contends that the same tax benefit of yield exemption is available to plaintiffs' lawyers and nonphysically injured tort plaintiffs under general, common-law tax …