Page 2: Cigarettes and Flavored Vodka: 5 Weird Taxes in Obama's Budget - ABC News
5. Businesses Can't Deduct Punitive Damages
Say you're a business, someone wins a lawsuit against you, and you're required to pay damages. You can write them off.
Not so, under Obama's budget proposal.
The White House plan would not only prevent businesses from deducting punitive damages from their taxable income, it would tax damages paid out by insurers, too: If a business takes out an insurance policy for some kind of liability, and that insurer ends up paying out damages on behalf of the company under its policy, those damages would be added to the business's taxable income.
Why is this a bad thing, exactly? I mean, I understand why it's buried on the second page of the article, but what am I supposed to find offensive about it? Why should a payout of punitive damages bring yet another reward? (I'm feeling rather incredulous about it, but if someone has an explanation that makes sense I'd be really interested to hear it.)
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