US: Tax on Punitive Damages Law Significantly Watered Down
California Governor Arnold Schwarzenegger's proposal to tax punitive damages at 75% was aimed at achieving the double whammy of righting the state's budget deficit and cracking down on class action litigation. But the reality has not matched that expectation, says Diana Saso
On 29 July, the California Legislature passed Governor Arnold Schwarzenegger’s $105bn (£57.7bn) budget, which included a controversial provision allowing the state to impose a 75% tax on punitive damages awarded in civil actions in state courts. The provision that the legislature actually passed, however, is a far cry from the aggressive proposal originally put forward by the Governor.
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