The Senate tax reform bill would end tax breaks for hush money, and Republicans are daring Democrats to oppose it.
Tucked into the legislation is a provision that would prohibit corporations from deducting as an expense any money spent to buy off victims. A vote against the overall package, Republicans no doubt will argue, is a vote to preserve the sexual assault write off.
Already, tax wonks like Phil Kerpen have dubbed it “the Weinstein tax.” It would reward transparency, and it would penalize secrecy. Here’s how it would work.
Pay out a settlement for sexual harassment to an employee, like a payment from Harvey Weinstein’s Miramax to a victim, and that money may or may not be tax deductible. Payments related to sexual harassment or abuse, the legislation mandates, are not deductible “if such settlement or payment is subject to a non-disclosure agreement.”
Put simply, gag the victim in order to sweep the incident under the rug, and it’s not tax deductible. But compensate the victim without gagging them, without trying to hide the incident from public view, and Uncle Sam will let you write that money off of your taxes. That is an inherently good thing.
Powerful creeps shouldn’t have the option to use corporate cash to shut up their victims. It’s possible Weinstein, for instance, would’ve been caught earlier if he couldn’t gag his victims with dollars. According to actresses like Rose McGowan, this was a common move of the disgraced movie mogul.
Back in 1997, McGowan alleges that Weinstein lured her to his hotel room and raped her. Shortly afterwards, per the actresses’ telling in the New York Times, a wealthy associate approached her with $1 million in hush money. She refused. Judging from the long list of victims, however, it seems more than likely that others sold their silence and took the cash.
Obviously, discretion is sometimes necessary in tragic assaults like these. It also doesn’t seem exactly fair that a business should be completely liable for their employee’s stupidity and malice. Non-disclosure agreements are lawful and sometimes necessary.
But the GOP plan puts teeth into the tax code, preventing corporations from getting a tax cut for silencing victims and enabling predators. If for no other reason, this provision should make Democrats reconsider the Republican plan.