WASHINGTON — The Republican tax bill would bar Americans from deducting confidential settlements with sexual harassment and misconduct victims from federal taxes.
The provision, originally written into the Senate’s version of the bill, applies only to sexual harassment and abuse settlements with non-disclosure clauses. That means that sexual harassment or abuse settlements that include a confidentiality agreement that prevents a victim from publicly sharing details about the incident can’t be deducted from taxable income as a business expense.
Present tax law doesn’t include specific rules for sexual misconduct settlements. But amid increased scrutiny, both Republican and Democratic lawmakers are pushing for more transparency.
“Under the provision, no deduction is allowed for any settlement, payout or attorney fees related to sexual harassment or sexual abuse if such payments are subject to a nondisclosure agreement,” the bill says. It would apply to amounts paid after the bill takes effect Jan. 1.
Confidentiality agreements inspired outrage after reports that Hollywood mogul Harvey Weinstein and former Fox News host Bill O’Reilly paid millions of dollars in secret settlements to women who accused them of sexual misconduct. Those settlements were subject to non-disclosure clauses that would penalize the victims if they spoke out about their experiences.
Under the new tax bill, those settlements wouldn’t be tax deductible. The provision doesn’t apply to settlements that don’t come with a confidentiality clause.
The provision reflects a shift in thinking on Capitol Hill about how sexual harassment complaints are made and resolved, including those against members of Congress.
Both the House and the Senate recently adopted mandatory anti-harassment training for all members and their staffs. Additionally, bills have been introduced that would require members to repay any settlements made from taxpayer money and eliminate mandatory confidentiality agreements that victims are required to enter into to participate in mediation, a necessary pre-cursor to filing a formal harassment complaint or federal lawsuits against a member of Congress.
The past month has seen six lawmakers step down or announce they won’t run for re-election after being accused of engaging in inappropriate behavior.
On Saturday, Rep. Ruben Kihuen, D-Nev., announced he wouldn’t seek re-election after several women stepped forward to accuse the congressman of sexually inappropriate behavior during his congressional campaign as well as during his time in office.
Days earlier, Rep. Blake Farenthold, R-Texas, who had previously paid $84,000 of taxpayer money to his former communications director to settle a sexual harassment claim, said he would retire at the end of his term.
Earlier this month, Reps. John Conyers, D-Mich., and Trent Franks, R-Ariz., as well as Sen. Al Franken, D-Minn., all announced they were leaving Capitol Hill amid accusations of sexual misconduct and the specter of ethics investigations.