News of the Day ... in Perspective8/14/2004
Tort tax costs U.S. more than $180 billion per year
According to Glenn Hubbard, former chairman of President Bush’s Council of Economic Advisors, the direct costs of America’s tort system amount to $180 billion per year, of which only 20% is paid to plaintiffs.
The total economic burden is far higher and includes distortions that arise and individuals and corporations seek to avoid litigation; defensive medicine; and decreased innovation.
Costs are borne by workers through lost jobs or lower wages; consumers through higher prices; landowners through reduced property values; and investors through lower profits and share prices. If the cost were borne entirely by workers, it would amount to 2.1% of wages (Business Week, Aug. 9, 2004).