After years of feeling like the United States was being taken advantage of by the rest of the world, the American people spoke up last November and elected President Trump to put America first. We are seeing him do just that with his crackdown on illegal immigrants, his efforts to level the playing field on trade, and his work to stop foreign students from taking spots at our universities that should be going to Americans.
Legislation recently introduced by Sen. Thom Tillis (R-NC) would take the same approach to reforming the tax code to protect the American legal system. Despite some misinformation about the legislation floating around on social media, Sen. Tillis should be commended for his new bill that would crack down on foreign wealth funds using the U.S. legal system to enrich themselves and their anti-American political causes.
This bill takes dead aim at a scourge on American consumers and business: Third-Party Litigation Funding (TPLF) for profit. TPLF is when people not involved in a lawsuit provide funding for plaintiffs in exchange for a significant portion of the proceeds from any settlement or judgment.
Now, you might be thinking that this sort of arrangement “levels the playing field” and allows the little guy to fight back against giant corporations and their armies of lawyers.
The problem is the vast majority of people funding these lawsuits are not allies doing this out of the goodness of their hearts. They are foreign investors, many of whom are American adversaries like the Chinese Communist Party, who pay to sue U.S. companies in U.S. courts and then avoid any U.S. tax obligation on their returns.
What makes this even more perverse is that, while the foreign funder of the lawsuit takes their cut of the proceeds and brings it back to their home abroad without paying U.S. taxes, the American plaintiff pays taxes on the full payout.
Let’s say a sovereign wealth fund pays for a plaintiff’s legal expenses in return for 30 percent of the judgment or settlement. The funder pays no taxes, whereas the American plaintiff is required to pay taxes on the entire settlement, despite receiving only 70 percent of it.
Beyond using these lawsuits to make a tax-free profit, foreign adversaries also use them to damage American companies by keeping them tied up in court, driving negative publicity about them, and most nefariously, using the discovery process to gain damaging confidential information that puts America at a disadvantage in the global economy.
This system of foreign funding is also a goldmine for woke trial lawyers. It’s bad enough that these predatory ambulance chasers already exploit the legal system to extort American businesses, but now they have access to an endless slush fund provided by foreign hedge funds.
This unlimited supply of foreign cash provides an even larger incentive for trial lawyers to aggressively seek out lawsuits that can boost their bottom line and drive up their foreign funders’ return on investment. And, the profit these trial lawyers make gives them more cash to fund left-wing political causes and the woke politicians who support them.
Sen. Tillis is offering a common-sense solution that would discourage these foreign entities from using American courts to harm America. This is a straightforward, conservative, and American First policy that protects hard-working American taxpayers.
While I strongly support efforts to halt the woke agenda that pervades our nation, Sen. Tillis’s bill doesn’t do anything to stop patriotic Americans from helping to fund the cost of holding corporate America accountable. It stops foreign adversaries from taking advantage of us and taking money out of the pocket of American families. That’s why Frontiers of Freedom joined nearly 20 other conservative consumer and taxpayer groups in supporting this policy.
We don’t have to agree with Sen. Tillis on everything to give him credit where it is due. Whether it is foreign students taking advantage of American Universities or foreign hedge funds taking advantage of American courts, voters elected President Trump and congressional Republicans to put America first. Sen. Tillis’s bill does just that.
