Dem seeks to curb tax breaks for employee buyouts over sexual misconduct

Dec 18, 2017
In The News

A House Democrat unveiled legislation on Monday that would prevent businesses from deducting the costs of buyouts for employees accused of sexual misconduct to lower the amount of taxes owed.

Rep. Carolyn Maloney’s (D-N.Y.) proposal would expand a provision tucked into the GOP’s final tax reform legislation that comes amid the national reckoning over sexual harassment.

Under the GOP tax overhaul set for votes in both the House and Senate this week, any settlement payments or attorney fees related to sexual harassment could not be deducted as business expenses if they are subject to nondisclosure agreements.

A number of prominent male figures accused of sexual misconduct in recent weeks have used settlements. The New York Times reported on about $45 million worth of settlements involving former Fox News host Bill O’Reilly, while Hollywood producer Harvey Weinstein also used settlements. One settlement Weinstein reached with actress Rose McGowan reportedly totaled $100,000.

The provision has bipartisan support, even though the overall tax legislation is expected to pass both chambers with only Republican votes.

“I don’t like the tax bill, but they were smart to put this in,” Maloney said, although she wants to take it further.

Maloney’s legislation would also prevent companies from deducting buyouts of employees ousted over sexual misconduct allegations.

O’Reilly, for example, reportedly left the network with a $25 million severance following allegations of sexual harassment and payouts to his accusers.

Roger Ailes, the former Fox News chairman who was also accused of sexual harassment, similarly received about $40 million upon leaving the network.

“Companies shouldn’t be able to use these buyouts as a way to lower their taxes,” Maloney said.

Some House lawmakers in both parties, including Reps. Ken Buck (R-Colo.) and Suzan DelBene (D-Wash.), had pushed to eliminate business expensing for settlements related to sexual misconduct.

Such a provision was not included in the House version of the tax overhaul, but made it into the Senate’s plan and ultimately the final bicameral product expected to be headed to President Trump’s desk soon.

Maloney unveiled an additional measure on Monday that would require companies to annually report all out-of-court settlements involving sexual harassment, assault and discrimination to the Equal Employment Opportunity Commission.

“Potential employees may have no idea about what kind of environment they are about to enter. With total secrecy, companies have absolutely no incentive to focus on preventing sexual misconduct if they know they will never be held accountable,” Maloney said.