The punitive damages tax

Posted on November 3, 2006 by Charles Kuffner

Here’s an idea: Why not tax those huge punitive damage awards that juries hand out like candy to greedy trial lawyers? Doesn’t that sound like a great way to add to the state’s coffers without really adding to anyone’s overall tax burden? Well, California gave it a shot in 2004 at the behest of Governor Schwarzeneggar. They hoped to raise as much as $450 million for the budget. How did it turn out? Not quite as expected. Dwight explains it all to you.

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One Response to The punitive damages tax

  1. Jim D says:
    November 3, 2006 at 9:01 am

    This might make a lot of sense if punitive damages were a lot more common – it would be a free tax for the state to collect and it would come from “bad people,” almost by definition. But, Dwight is right to point out this won’t work in our space-time dimension.

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