Senator Thom Tillis (R-North Carolina) has proposed a tax increase that tramples traditional legislative procedures. Even worse, among numerous other flaws, the Tillis Tax would hurt inventors, hinder conservatives, and help terrorists.
Tillis’s measure is S. 1821, the Tackling Predatory Litigation Funding Act. It would impose a steep 40.8 percent tax on the proceeds from “litigation financing agreements.”
In these arrangements, investors underwrite costly, complex civil actions in hopes of collecting a share of any ensuing legal settlements or jury awards. In turn, plaintiffs with limited means can afford attorneys to seek compensation for their losses or injuries. Without these investments, few such cases would go forward. Rather than “litigation-finance companies,” such investment firms should be called “justice-access funds.” In their absence, thousands of Americans would not get past the front doors of courthouses.
The Tillis Tax would create a massive disincentive for justice-access funds to support worthwhile legal claims. This new 40.8 percent tax nearly doubles today’s 21 percent corporate levy! The Tillis Tax slams one industry that one particular senator dislikes. If the Tillis Tax becomes law, why not a 40.8 percent Schumer Tax on the profits of firearms manufacturers? Could a 40.8 percent Sanders Tax on stock brokers be far behind?
Love or hate the Tillis Tax, a measure this significant should endure strict scrutiny under normal protocols. And yet the Tillis Tax never has faced a congressional hearing, a committee markup session, or even a cameo appearance in an earlier bill. Such legislative line-cutting might be tolerable if the Tillis Tax promised anything good. Unfortunately, it threatens havoc in multiple ways. Here are three:
First, the Tillis Tax would hurt inventors and, thus, hamper innovation.
One disturbing business reality is that large corporations sometimes swipe the creations of smaller, more vulnerable companies and individuals. Marc Abraham’s 2008 film, Flash of Genius, compellingly illustrates this problem. In this true story, college engineering professor Bob Kearns (Greg Kinnear) crafts the intermittent windshield wiper after years of tinkering in his Detroit home. Ford Motors gives the device a spin and loves it. So, Ford introduces it in its 1969 Mercury line and tells Kearns to hit the road. He then devours his family’s limited resources in court, trying to get Ford and Chrysler to give him the credit and royalties he deserves.
Unfortunately, this 56-year-old story is a current event for too many inventors. Big Tech and Big Pharma are among the prosperous sectors that pickpocket the intellectual property of imaginative Americans. Justice-access funds front these innovators the cash they need to hire lawyers and sue these large outfits to recover what they stole.
In April 2024, a federal grand jury in Illinois ruled that Amazon Web Services infringed on the cloud-storage patents of Kove, a far-smaller technology company. (Amazon claims innocence and is appealing.) Regardless, the jury instructed Amazon to pay Kove $525 million. Justice-access capital providers often maintain anonymity, lest they land in the legal crosshairs. Privately held Kove keeps its revenue data to itself. It operates in a shared industrial loft in Chicago. It’s hard to imagine that it confronted Amazon (2024 revenue: $638 billion) without the third-party assistance that the Tillis Tax targets.
“This massive tax hike will chill innovation, harm institutional investors, and make it harder for American businesses to protect their intellectual property rights,” warns Kristen Osenga, Chief Policy Counselor at the Inventors Defense Alliance. An IDA statement elaborated: “Without litigation finance, IP enforcement collapses — and with it, the incentives that drive American innovation.”
Second, the Tillis Tax would hinder conservatives. Specifically, it would deplete the pool of justice-access capital that the Right has cultivated to secure legal victories. The ensuing leak of these funds will impoverish conservative attorneys, institutions, and those they serve.
America First Legal Foundation sued the U.S. departments of Commerce, Justice, and Homeland Security under the Freedom of Information Act. AFL wondered to what degree these and 11 other federal agencies used former President Joe Biden’s Executive Order 14019 to register voters, and if they kept it legit.
The Thomas More Society sued the City of Minneapolis when it tried to implement a buffer zone to isolate pro-life counselors outside a Planned Parenthood office. Minneapolis backed down and paid TMS $450,000 in legal fees and expenses.
Attorney Noah Hurwitz, Esq., sued Blue Cross/Blue Shield of Michigan after it fired Lisa Domski, an IT specialist who refused the COVID vaccine because of her devout Catholicism. A state jury’s $12.7 million award to Domski included $10 million in punitive damages.
These groups and plaintiffs thrive on third-party justice-access funds. And the Tillis Tax would snatch 40.8 percent of payouts like these. Such federal greed would complicate investors’ risk/reward calculations, to the detriment of these conservative institutions and those they herald.
Third, amazingly enough, the Tillis Tax would help terrorists.
A highly specialized class of attorneys performs a massive private and public service by “helping all citizens who have fallen victim to serious terrorist acts,” as the Fay Law Group’s website explains. The Rockville, Maryland-based practice “has collected more than $2 billion from Iran on behalf of victims of terrorism.” It also has secured other judgments “against foreign state sponsors of terrorism.”
Fay Law has scored monetary relief for those killed and wounded in the Islamic Jihad Organization’s October 1983 bombing of the U.S. Marine and French military barracks in Beirut and al-Qaeda’s August 1998 twin attacks on U.S. embassies in Kenya and Tanzania.
“Fay Law Group is committed to seeking justice for American victims who were murdered, tortured, injured, and taken hostage by Hamas,” including during its October 7, 2023, slaughter in Israel. Fay Law’s overall goal is almost angelic — something rarely said about attorneys. “The foundation of our practice is the steadfast belief that obtaining and enforcing court judgements against terrorists allows us to cut off their lifeline — money — and prevent future attacks.”
Thomas Fay, Esq., this firm’s founder, deserves the Presidential Medal of Freedom. Instead, Washington, D.C., is debating whether or not to wrap the Tillis Tax around his neck. The Tillis Tax would dissuade justice-access funders from backing long, difficult cases against bloodthirsty states and groups that typically litigate at gunpoint.
And if Fay and similar firms do win blood money from Iran’s ayatollahs, al-Qaeda’s cavemen, and Hamas’ tunnel-dwellers, the Tillis Tax could be there, to seize 40.8 percent of the funds attained for those who lack eyes, limbs, or lives, due to Muslim-extremist mayhem.
For these reasons and many more, the Tillis Tax should be excised from the Big, Beautiful Bill and allowed to wallow in its own ugliness until dead.
“As usual, Thom Tillis is working against his constituents’ interests and against conservatism,” author and Townhall columnist Kurt Schlichter observed via X. “Every American has a right to bring a lawsuit. It’s nobody’s business how they fund it. And lawsuits are hugely expensive,” Schlichter added. The Tillis Tax “doesn’t stop bad lawsuits. It stops good ones.”
READ MORE from Deroy Murdock:
No More GOP Tax-Hike Talk! Silence Is Golden.
Deroy Murdock is a Manhattan-based Fox News Contributor.