The recently unveiled tax provisions of President Trump’s budget bill propose a 41% levy on profits derived from litigation finance, an amendment that could significantly dampen investor interest in this sector. Senate Republicans, spearheaded by Senator Thom Tillis of North Carolina, introduced these changes as part of the broader tax and healthcare package, designated as H.R. 1. According to materials from Tillis’s office, this measure is anticipated to generate approximately $3.5 billion in revenue over the next decade.
The litigation finance industry, valued at $15.2 billion, operates by having investors fund lawsuits in exchange for a share of any successful awards. The proposed tax hike poses potential ramifications for this burgeoning field, as it may lessen the financial appeal to current and prospective funders. More details about these legislative changes and their projected impact can be found in an article by Bloomberg Law.