Taxpayers may not see an extra line for the “lawsuit tax” on the IRS forms they are filling out this spring, but as the April 15th filing deadline approaches they are certainly bearing the burden of one nonetheless. According to a new study by Tillinghast Towers Perrin, every American pays $721 – or $2,884 for a family of four – to cover the costs of lawsuits across the nation, noted Jon Opelt, Houston director of Citizens Against Lawsuit Abuse.
The total expense of the U.S. tort system in 2001 was $205 billion, equivalent to a 5 percent tax on wages, said Opelt. Nearly 20 percent of those costs went to claimants’ legal fees.
“Albert Einstein once said ‘The hardest thing in the world to understand is the income tax.’ If Einstein were alive today, I think he’d clearly understand the negative impact of the lawsuit tax,” said Opelt. “It doesn’t take a genius to see that we all pay dearly for lawsuit abuse and excessive litigation.”
Unfortunately, there are no signs of a lawsuit tax cut, said Opelt. According to the Tillinghast Towers Perrin report “annual increases will be in the 7 percent to 11 percent range for the next several years. At this rate of increase, tort costs could approach $1,000 per U.S. citizen by 2005 – representing a new quadruple-digit benchmark.”
That is a number that is hard to write off, Opelt said, considering the tort system returns less than 50 cents on the dollar to injured plaintiffs and 22 cents on the dollar for actual economic loss.
The information was taken from the Tillinghast Towers Perrin study which can be found at: