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San
Diego, CA - What's
one tax that San Diego County families pay every year but don't know it,
can't deduct it, and unless things change, will only cost them more next
year?
The answer is "the
lawsuit tax," the hidden tax Americans pay every year due to lawsuits
and lawsuit abuse. It comes from the cost of legal fees, court time,
liability insurance, awards and settlements that is passed on to
consumers. According to "Lawsuit Abuse, Guess Who Picks up the
Tab," by the American Tort Reform Association (1994), this tax
amounts to an annual cost of $1,200 per person, or almost $5,000 for a
family of four -- and the number continues to rise each year.
"Because of lawsuit
abuse and outrageous verdicts, every day is tax day, not just April
16," said Andy Kotner, President, of San Diego County Citizens
Against Lawsuit Abuse (CALA). "We consumers all pay the lawsuit tax
every time we go to the grocery store, visit a doctor, or buy just about
any product or service available."
Kotner also says that
even our tax dollars are affected by the lawsuit tax. City and county
governments are a frequent target of lawsuits that must be defended. The
costs for building a defense, as well as any costs paid out in awards or
settlements, are all paid with taxpayer dollars.
One case at the state
level involved an arbitration award that was going to pay five law firms a
total of $88.5 million taxpayers dollars for representing only four
clients, a rate of nearly $9,000 per hour.
"None of us like
paying taxes, but if we do we'd like to see it go to schools, law
enforcement and parks, not to some trial lawyers pockets," Kotner
said.
While financial costs are
the most obvious form of a lawsuit tax, Kotner says lost jobs, closed
businesses, less innovation and less access to medical treatments are
other ways consumers pay the lawsuit tax. A few examples include:
- According to the
Society for the Advancement of Women's Health Research, the number of
companies performing research on contraceptive devices has declined
from 13 to 2, due to fear of liability.
- The Congressional
Committee on Commerce, Science and Transportation, in examining the
Product Liability Reform Act of 1997 stated, "Liability concerns
are keeping beneficial products such as Benedictin®, the
only anti-nausea medication ever approved by the FDA for use during
pregnancy, off the market."
- According to Peter
Huber, in his article "The Road to Junk Science," fifty to
eighty percent of the cost of most vaccines is liability insurance.
- An article in Newsweek
calculated the lawsuit tax built into several consumer items. These
include:
- Eight foot aluminum
ladder - lawsuit tax: $23.86
(20% of total cost)
- Heart pacemaker -
lawsuit tax: $3,000.00
(16.5% of total cost)
- Motorized wheelchair
- lawsuit tax: $170.00
(17% of total cost)
- Tonsillectomy
(doctor's fee) - lawsuit tax: $191.00
(33% of total cost)
- Two-day maternity
stay - lawsuit tax: $500.00
(15% of total cost)
"The list could go
on and on," Kotner said. "Until we can make some real changes to
restore some sanity to our legal system, all consumers will continue to
pay for lawsuit abuse every day."
San Diego County CALA is
a nonprofit, grassroots, public education organization dedicated to
serving as a watchdog over the legal system and those who would seek to
abuse it for undeserved gain. More than 8,000 San Diego County residents
are San Diego CALA supporters.
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