Talk About 'Gross' Taxes

While the people and businesses and institutions that create jobs for the working people of Illinois tremble at the prospect of the ever-enlarging gross receipts tax proposed by the governor, consider some of these facts:

A new analysis of the cost of the U.S. tort system shows that $865.37 billion is spent annually -- the direct result and cost of lawsuits.To put it in perspective:

• The federal government currently spends about $65 billion on schools and
education -- less than one-tenth of the cost of lawsuits.

• In 2005, the total amount of charitable giving by Americans totaled $260
billion -- less than one third of the cost of lawsuits.

• The budgets for the Pentagon and conflicts in Iraq and Afghanistan
totaled about $500 billion in 2006 -- less than two-thirds the costs of lawsuits
in America.

Here are two additional statistics that should open some eyes:

• The cost of the tort system to a family of four is estimated at $9,827
per year.and this:

• Less than 15 percent of the $865.37 billion actually goes to compensate
injured people. Where does most of the money go? Look on the back
cover of many - maybe most -- telephone directories in Illinois and you'll get a
hint. (No, not the plumbers.)

These staggering numbers --even higher than previous studies -- are the result of a thorough and comprehensive study by economists at the Pacific Research Institute, based in San Francisco.

The report was released nationally last week by PRI and the American Justice Partnership. It did not receive wide coverage in Illinois, in large part because of the intense media focus on legislative activity in Springfield.But it deserves attention. It is the most comprehensive study ever of the costs of the tort system.

And there has been no significant disagreement that the numbers are valid.

The comprehensive PRI analysis does not look at the costs of the tort system on a state-by-state basis. If it did, chances are the numbers for Illinois would be substantially higher than the national average. Every state-by-state analysis during the past ten years has shown Illinois to have one of the worst legal environments, and thus one of the most unfair tort systems.

According to the American Tort Reform Association, three Illinois counties are among the six worst court jurisdictions in the U.S. The annual Harris International poll of legal environments ranks Illinois near the bottom -- in the bottom ten -- of the 50 states for legal fairness. An earlier PRI study ranked Illinois 32nd of 50 states. That apparent "lofty" rating was the result of recently passed medical malpractice reform legislation in Illinois which, of course, must still get through the Illinois court system, beginning in Cook County, one of those three "hellhole" jurisdictions in Illinois.

But rather than working to find ways to reduce the cost of the tort system in Illinois, legislators in Springfield -- urged on by the trial lawyers -- are considering -- and acting upon -- new ways to burden Illinois citizens, Illinois businesses, Illinois cities and schools, Illinois health care systems with higher tort costs.

As Seven Puiszis, the president of the Illinois Association of Defense Trial Counsel wrote in a letter to the Chicago Tribune :

"While you weren't looking, the Illinois Trial Lawyers Association has quietly
introduced legislation that would squeeze still more money out of law-abiding
citizens and businesses across the state."

Puiszis was referring to one bill -- SB 1296 -- which has already been passed by the Illinois Senate and awaits action in the Illinois House. You can learn much more about SB 1296 at DeepPocketsIllinois.com.

There are other trial lawyer money-grab bills. HB 1798 would provide compensation for "grief, sorrow and mental suffering" in wrongful death cases, thus providing more money for trial lawyers for "losses" that cannot be calculated or defined. According to the Illinois State Medical Society, this bill is "clearly an attempt by personal injury lawyers to inflate jury verdict awards in medical liability actions."

SB 1027 is a bill that is likely to be amended to include the language of SB 747 that would require that defendant's pay to the plaintiffs the full bill for expenses, even if the plaintiffs themselves received a discount on those expenses. In essence, it allows compensation to the plaintiff (and their lawyers) for amounts which were not actually lost.

Personal injury trial lawyers in Illinois are flexing their muscles in Illinois in 2007. They've been frustrated for the past four years because Illinois legislators generally acted responsibly when the trial lawyer demands were fully explored. This year, they are on the prowl again, as spelled out by their president, Judy Cates, in their newsletter.

Nationally, the average family of four is paying $9,827 per year as a "tort tax." In Illinois, one of the most litigious of all states, that cost could easily be 50 percent higher -- or more.

Illinois legislators should be aware that the proposed gross receipts tax is not the only assault on Illinois taxpayers this year. The personal injury trial lawyers are on the prowl too and Illinois voters are paying attention to the roll calls.

Cross-posted by Ed Murnane at the Illinois Justice Blog.

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