June 14, 2018

Dear Republicans, Don’t forget to proofread your shitty tax law unless you want to be, amazingly, even worse

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The unequivocally great thing about 2017’s horrible Tax Cuts and Jobs Act is how it makes billionaires really fucking rich and the rest of us actually literally dead.

But good news! There’s another perk to this disgusting boil festering on our collective financial soul: ripping off victims of sexual harassment by prohibiting them from deducting the legal expenses of settled sexual harassment cases from their taxes. The means by which this noble goal is realized? Shitty phrasing.

Here’s the deal, from Jeff Green and Sahil Kapur at Bloomberg: one of the law’s provisions ends a loophole that once allowed companies to claim tax deductions when they reached sexual harassment settlements that included non-disclosure agreements. This is great; obviously, Harvey Weinstein and Roger Ailes shouldn’t be able to write off their goddamn legal fees for being lecherous pigs. This elimination stems from an amendment introduced by New Jersey Democratic Senator and no-stranger-to-legal-woes Bob Menendez, who added an amendment to the effect that the use of NDAs should be penalized, not supported, in light of the #MeToo movement.

But some dumb fuck in the Republican party muddied the waters. As the amendment currently stands, the elimination of tax deductions applies to the victims of harassment — not just the harassers, as intended.

The original provision made clear that the deduction change only applied to the company, not the victim, according to Steven Sandberg, a spokesman for Menendez. Republican tax writers used the word “chapter” rather than “section” in the amendment, which could be interpreted as broadly applying the elimination to victims.

What does that mean in terms of dollars? Green and Kapur spoke with Genie Harrison, a lawyer representing one of Weinstein’s victims. She lays it out pretty clearly: “[I]n a $100,000 settlement, costs and fees might take $45,000 with $55,000 going to the victim. Without the deduction, the victim would pay taxes on the entire $100,000, which may mean a tax bill equal to or larger than their payout, she said.”

Forgive a dip into legalese, but this fucking blows. And now that we’re squarely mired in the lead-up to the midterm elections, and the accompanying unavoidable gridlock, there’s no guarantee that this typo will be fixed any time soon. Green and Kapur spoke with senior House and Senate Republican aides, who acknowledged the issue and are discussing a “technical correction to the tax law.” Compounding the problem is this: sixty votes are required to pass a bill correcting errors, and not a single Democrat voted for the tax bill. There are currently fifty-one Republicans in the Senate. Nine Democrats would need to sign off on this correction. And the odds of them doing so without asking for additional concessions (cf: Republicans amending the Affordable Care Act) seem … not good.

Legal experts are concerned that, until the rule is clarified, victims will be hesitant to bring any claims of harassment forward. Something to keep in mind the next time your uncle asks you, “How can we trust these women if they didn’t come forward earlier?”

 

 

Susan Rella is the managing editor at Melville House, and a former bookseller.

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