Just when you thought it was safe to practice law without the specter of becoming a taxing conduit of the government looming, our new governor, Tom Wolf, has begun production on Tax on Legal Services II. Actually, the number of times a tax on legal services has been proposed in a legislative session would be more akin to the number of “Rocky” movies, going back at least to the Rendell administration. Either way, the battle to keep the necessity of legal services untaxed that heated up at the end of the last legislative session is set to intensify once again. Last year, the proposed bill on the taxation of legal services passed the state Senate Finance Committee in bipartisan fashion for the first time ever. The impending governor’s race was actually one of the reasons the bill never made it past the full Senate. It was hoped that a Democratic administration would see legal services as the basic constitutional right that it is and not just a commodity and prospective cash cow that it is being treated as.

The proposed new tax would obviously impact the practice of workers’ compensation, as it would any legal field. From the prospective of the injured worker, the imposition of a tax on much needed legal services would be an abject disaster. The system is already limited in its design to provide only a basic income, oftentimes a fraction of one’s original earnings. Moreover, workers’ compensation payments were never intended to be taxed from the beginning, as indemnity benefits are already reduced by the average tax rate and are not subject to state or federal taxation.

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