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Tax Deductible Speeding Tickets?

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Saturday, 13 October 2012 07:47

I wouldn't try taking the deduction, but apparently banks and other corporate crooks are often able to deduct the settlements in civil actions from their taxes. Good piece in the Post calling attention to this issue.

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Does it make a difference?
written by Bob, October 13, 2012 9:11
It is a point many may not be aware of but it satisfies the needs of both parties. The government likes to announce larger numbers which is not a cause for surprise. And, it of course understands as a general matter the after tax impact of the settlement. Eliminating the current tax treatment would be economically meaningful only if the government were able to obtain the same level of settlement if the tax treatment were different. That being said, from a political perspective there is nothing good in allowing the parties to trumpet numbers that at the end of the day are often misleading.
...
written by Jay, October 13, 2012 9:36
It would have been nice if they had said up front what deduction was being used. Towards the end, it sounds like it's the ordinary and regular business expense deduction. This is an unusual and infrequent business expense unless a business has some serious problems or is large enough to be exposed to more risk due to sheer numbers. Again, it shows the sense of entitlement that the "job creators" have because they masters of the universe. It makes sense for a plaintiff to not pay taxes because you are trying to make them "whole." It doesn't make sense for a business that has violated a law and probably almost bankrupted a person that dared to challenge them.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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