A bill to amend the Internal Revenue Code of 1986 to disallow any deduction for punitive damages, and for other purposes.

Mr. President, as Republicans consider tax proposals to disproportionately benefit corporations and the wealthy, they simultaneously fail to address revenue-draining loopholes that compel hardworking taxpayers to subsidize corporate misconduct. Today, I am introducing commonsense legislation--the ``No Tax Write-Offs for Corporate Wrongdoers Act''--to prevent the worst corporate actors from writing off their wrongdoing as simply the cost of doing business. This idea is commonsense. This idea is straightforward. This idea should be bipartisan.

Today's tax code allows corporations to deduct the cost of court- ordered punitive damages as an ``ordinary'' business expense. Courts reserve punitive damages for only the most egregious and reckless misconduct--misconduct that usually causes great harm to peoples' lives. For victims who have suffered at the hands of the worst corporate bad actors, there is nothing ``ordinary'' about this loophole. Punitive damage awards are designed to punish wrongdoers for the reprehensible harm they cause--to provide a deterrence to misconduct. By giving corporations a deduction specifically for their wrongdoing, our tax code winks and nods at future wrongdoers who know that they can simply write off the damages they owe for the damage they cause.

This is not a theoretical problem. In 1994, when the Exxon Valdez spilled 11 million gallons of oil in the Prince William Sound, devastating Alaska's southern coast, it was eventually slapped with punitive damages of $500 million. Exxon turned around and exploited this tax loophole to write off those punitive damages as an ``ordinary'' business expense--saving the company millions of dollars that could have--and should have--added to government revenues. In 2011, two Montana teenagers died in a car crash caused by a steering wheel defect in the Hyundai model they were driving--a defect that Hyundai knew about and recklessly ignored for over a decade. Although a judge eventually ordered Hyundai to pay $73 million in punitive damages, Hyundai can lawfully write those damages off as a business expense. This is just wrong.

The No Tax Write-Offs for Corporate Wrongdoing Act is simple and straightforward, and would end this offensive loophole once and for all. My bill would amend the tax code to prevent the deduction of any amount ``paid or incurred for punitive damages in connection with any judgment in, or settlement, any action between private parties.'' Aside from bringing our tax code in line with our most basic notions of justice and fair play, my bill would save American taxpayers a significant amount of money. In 2016, the Joint Committee on Taxation estimated that ending this punitive damages loophole would increase our government revenues by nearly $415 million over 10 years.

The Senate will be talking a lot about tax reform in the coming weeks. The Senate majority will bend over backwards--they already are-- to argue how important it is that we dramatically lower tax rates to make our tax system more favorable to large corporations. Should we not also hold these same corporations accountable when they poison our environment and harm Americans? Legislation that leaves such an egregious loophole in place while giving companies massive tax cuts is not tax reform. It is a corporate tax giveaway.

It should shock the conscience to know that our law effectively compels hardworking taxpayers to subsidize the recklessness and bad behavior of the worst corporate actors. This bill would change this unacceptable status-quo. I thank Senators Blumenthal, Reed, Gillibrand, and Hassan for cosponsoring this legislation. I urge all Senators--of all political ideologies--to support the No Tax Write-Offs for Corporate Wrongdoing Act. Protecting our constituents from corporate misconduct is not a political or partisan issue. It is our job.

Mr. President, as Republicans consider tax proposals to disproportionately benefit corporations and the wealthy, they simultaneously fail to address revenue-draining loopholes that compel hardworking taxpayers to subsidize corporate misconduct. Today, I am introducing commonsense legislation--the ``No Tax Write-Offs for Corporate Wrongdoers Act''--to prevent the worst corporate actors from writing off their wrongdoing as simply the cost of doing business. This idea is commonsense. This idea is straightforward. This idea should be bipartisan.

Today's tax code allows corporations to deduct the cost of court- ordered punitive damages as an ``ordinary'' business expense. Courts reserve punitive damages for only the most egregious and reckless misconduct--misconduct that usually causes great harm to peoples' lives. For victims who have suffered at the hands of the worst corporate bad actors, there is nothing ``ordinary'' about this loophole. Punitive damage awards are designed to punish wrongdoers for the reprehensible harm they cause--to provide a deterrence to misconduct. By giving corporations a deduction specifically for their wrongdoing, our tax code winks and nods at future wrongdoers who know that they can simply write off the damages they owe for the damage they cause.

This is not a theoretical problem. In 1994, when the Exxon Valdez spilled 11 million gallons of oil in the Prince William Sound, devastating Alaska's southern coast, it was eventually slapped with punitive damages of $500 million. Exxon turned around and exploited this tax loophole to write off those punitive damages as an ``ordinary'' business expense--saving the company millions of dollars that could have--and should have--added to government revenues. In 2011, two Montana teenagers died in a car crash caused by a steering wheel defect in the Hyundai model they were driving--a defect that Hyundai knew about and recklessly ignored for over a decade. Although a judge eventually ordered Hyundai to pay $73 million in punitive damages, Hyundai can lawfully write those damages off as a business expense. This is just wrong.

The No Tax Write-Offs for Corporate Wrongdoing Act is simple and straightforward, and would end this offensive loophole once and for all. My bill would amend the tax code to prevent the deduction of any amount ``paid or incurred for punitive damages in connection with any judgment in, or settlement, any action between private parties.'' Aside from bringing our tax code in line with our most basic notions of justice and fair play, my bill would save American taxpayers a significant amount of money. In 2016, the Joint Committee on Taxation estimated that ending this punitive damages loophole would increase our government revenues by nearly $415 million over 10 years.

The Senate will be talking a lot about tax reform in the coming weeks. The Senate majority will bend over backwards--they already are-- to argue how important it is that we dramatically lower tax rates to make our tax system more favorable to large corporations. Should we not also hold these same corporations accountable when they poison our environment and harm Americans? Legislation that leaves such an egregious loophole in place while giving companies massive tax cuts is not tax reform. It is a corporate tax giveaway.

It should shock the conscience to know that our law effectively compels hardworking taxpayers to subsidize the recklessness and bad behavior of the worst corporate actors. This bill would change this unacceptable status-quo. I thank Senators Blumenthal, Reed, Gillibrand, and Hassan for cosponsoring this legislation. I urge all Senators--of all political ideologies--to support the No Tax Write-Offs for Corporate Wrongdoing Act. Protecting our constituents from corporate misconduct is not a political or partisan issue. It is our job.