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Straight Talk

By James Hettinger
Senior Advisor, Battle Creek Unlimited
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Two things converge in this commentary. The first is the awareness that government everywhere continues a search for new sources of revenue. The second is my own commitment to try and test the boundaries of thinking, up to and including thinking sure to infuriate certain groups, no matter how unintentional it may have been.

As the government financing crisis has deepened, there is more rhetoric about taxing services. We are now talking about taxing tanning salons, barber shops, even high skilled activities such as aircraft repair and refurbishment. And to round out this discussion, there is a huge source of potential revenue available to us that we have not mentioned.

I should point out that I was raised by a mother who managed a law firm and I was always taught to respect and revere the system of justice. One of those lawyers was easily one of the most brilliant and eloquent people I have ever known. He taught me the creative possibilities of the English language. I use this background to illustrate no particular hostility toward the legal profession.

With that background in mind, why not consider the taxation of legal services? This could be a significant source of revenue for financially strapped governments. Hour after hour, lawyers advertise on the radio and television airwaves. Billboard signs dot the landscape advertising legal services. Taken a bad fall? Call Muggett and Sluggett for a free legal consultation. Taken a medication that has produced bad effects? Call Greasem and Howe for a free legal consultation.

Trial lawyers associations and other attorney interest groups contribute to political campaigns and attempt to influence legislation that will benefit the legal sector. This is commerce.

Nobody uses the public infrastructure like the legal profession. The so-called system of justice is financially underwritten by taxpayers like you and me. Somebody is benefiting disproportionately from the system. As our Vice President recently said, “It is time to be part of the deal.”

The peoples’ right to seek justice through their court system should be free from infringement. That must always be respected and protected. But why not break down the various legal processes and look for revenue generation opportunities? For example, is there a way to tax contingency suits?

Recently, I was contacted by legal representatives involved in a major legal settlement. I was advised that I might be due for compensation. The settlement was in the $13 billion range. Legal fees consumed approximately 90 percent of the settlement while I was entitled to .00056 for every dollar I had invested. While this did not strike me as a “just” settlement, the lawyers made out very well. Why should government not tax about 10 percent of the legal take?

Legislators should take a long look at our legal processes and attempt to identify opportunities for revenue enhancements. Of course it should be pointed out many legislators come from legal backgrounds and again, lawyers do contribute big bucks to the political processes. It doesn’t take getting hit in the head by an Asian Carp to know how little chance this idea has.

But our current system of government is unsustainable from a tax and finance point of view and all options should be on the table. There are no sacred cows. At least, there shouldn’t be. There are not enough tanning salons and barber shops to carry the burden of taxation. It is time to be part of the deal.

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