Senate Republicans are wading into a growing multi-billion-dollar industry in their reconciliation bill with a new tax that’s backed by major business groups.
The Senate Finance Committee tax proposal released Monday evening includes a tax on profits from investing in litigation. Republicans normally hate raising taxes, but the provision could almost double the tax on third-party litigation earnings from 21% to nearly 41%.
“Third-party litigation funding,” or TPLF, refers to the money from someone not involved in a case — often hedge funds, foreign sovereign wealth funds, wealthy individuals and other investors, according to a 2022 Government Accountability Office report — that is invested in a lawsuit in exchange for a cut of the potential settlement or award.