Detroit Taxpayers Get Hit With Special Lawsuit Tax

The “hidden” lawsuit tax we all pay because we live in the most lawsuit-happy society on earth isn’t hiding in Detroit anymore.

It’s right there in plain sight for residents of the Motor City who got a property tax bill this summer. The Detroit Public School district has had to pay so much money for lawsuits against the district over the past year that officials there put a special “judgment tax levy” on the most recent property tax bill.  Read about it in the Detroit Free Press here.

Now, I’ve been talking about the hidden lawsuit tax for years, but this action by the Detroit schools underscores the fact that we all pay for lawsuits, even if we’re never directly sued.   Sure, the lawsuit tax isn’t a line most of us have seen on the receipts we’ve received when purchasing goods and services, but that is beginning to change.

Cities across the country are reporting record payouts for lawsuits, and with budgets getting squeezed, experts believe special lawsuit taxes may spread if the problem of lawsuit abuse isn’t addressed.  Local governments aren’t the only ones beginning to pass on the cost of lawsuits, either.

In an earlier post on this blog, I revealed that the hugely popular City Museum in St. Louis has added a charge to its tickets to pay for lawsuits against the museum.   Start adding up all of these special taxes and surcharges, and it’s easy to see how the Pacific Research Institute came up with a “tort tax” of nearly $2,000 that is imposed on every man, woman and child in the United States each year.

Whether it’s called a lawsuit tax, tort tax or judgment tax, no one wants to have to pay it.  The only thing good about having these taxes now begin to appear on actual bills is that it will make everyone aware that we are all paying for the lawsuit epidemic happening in our country.  Awareness of the problem is the first step toward fixing it.

Hot Off The Presses: The 2010 U.S. Tort Liability Index…With Foreword By Sarah Palin

Kudos to the Pacific Research Institute for not only producing another groundbreaking study about America’s tort climate that is extremely well-researched and enlightening, but for finding a new and creative way to get more people to read it.

They got someone who’s motivated quite a few new people to get involved in the political process to write the foreword: Sarah Palin.

Let’s face it, after all of the research and analysis has been completed, after the authors have dotted the last “i” and crossed the last “t,” and after the printers and web masters have published the reports and eye-catching web sites, all is for naught if it’s not read by policy makers, thought leaders, reporters and yes, even average Americans.

By adding Sarah Palin’s voice to this project, it’s certain to get a lot of new people to turn their heads in their direction.  More importantly, her foreword will get people to actually turn the pages of this hugely important report.

Palin points out that Americans need to pay attention to the tort climate in their state because “states with sound civil-justice systems and fair tort rules enjoy lower insurance premiums, increased employment and output, and higher individual incomes.”  Right on the mark, Governor!

PRI’s U.S. Tort Liability Index: 2010 Report measures which states impose the highest and lowest tort liability costs.   Beyond that, it examines how states can reduce lawsuit abuse and bring about “a more balanced, predictable and affordable civil-justice system.”

I’m a big fan of the authors of this report, Lawrence McQuillan and Hovannes Abramyan.  In recent years, they have done a lot of heavy lifting by digging deep through the statistics to reveal the true costs of our lawsuit-happy society.   Their insight and analysis reveals how we can jump-start the economy without any more taxpayer bailout money, and they show which states are doing that now.