January 26, 2012

Assemblyman revives proposal to eliminate tax deduction for punitive damages

Last year we blogged about Assemblyman Mike Feuer's proposal to prevent California taxpayers from taking a tax deduction for payments of punitive damages.  The bill, Assembly Bill 1276, got through the appropriations committee by a vote of 12-5, but failed in a floor vote and was moved to the "inactive" file last June.  The issue appeared to be dead, but it has recently come back to life.

At Feuer's request, the bill was removed from the inactive file and will come up for another vote on the floor.  Feuer is trying to drum up support for the bill on Twitter

When courts punish corporations for egregious misconduct, we expect they’ll pay. But a tax loophole lets them to [sic] deduct punitive damages! 
My AB 1276 prevents corporations from writing off punitive damages as “business expenses.” Contact your member and urge support today.
The bill needs a 2/3 vote to pass.  Our sources in Sacramento tell us there's no chance of that happening.