Pandemic Liability Claims Would Boost California’s ‘Lawsuit Tax’

Californians are well aware of the heavy tax burden they bear for living in the Golden State. We have the highest income tax rate, highest state sales tax rate and highest gas tax in the nation. But taxpayers may not be aware that they are also paying a $574 “lawsuit tax” each year. That’s the price of unnecessary litigation, added to the price of goods and services, that businesses must absorb to cover the costs of potential lawsuits.

When tort laws are misused, everybody pays for it. Lawsuit abuse is possible when state laws enable private lawyers to hunt for violations, file lawsuits and seek quick settlements. Business owners face a choice between the cost of the settlement and the even higher cost of a long legal fight in the overwhelmed court system. These needless costs add up, and they can ultimately result in closed businesses and lost jobs. Tort reform can help provide protection and relief for business owners from abusive shakedown lawsuits.

The cost of lawsuit abuse is revealed in a new study titled, “The Impact of Tort Costs and the Potential Economic Benefits of Tort Reform in California,” sponsored by Citizens Against Lawsuit Abuse (CALA).

Regrettably, our political leadership has punted on this issue. It would have been helpful had the governor addressed pandemic liability early in the crisis. After all, he has signed 64 executive orders since declaring a State of Emergency on March 4, 2020.  And there have been over 400 suspensions or changes to state law during that span as well. But not one was related to legal protection for hard-hit businesses that faced volumes of ever-changing new rules and regulations.

To read the entire column, please click here.

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