Tax Analysts Blog

Tax Breaks for Lawyers -- No Joke

Posted on Feb 12, 2014

Sometimes I have to pinch myself. I read recently in the Kansas City Business Journal that Missouri gave a big law firm $2.8 million in tax incentives to move to Kansas City. I thought there must be some kind of mistake. Certainly, no politician would agree to give citizens’ hard-earned money to lawyers. And certainly, they would not give citizen money to big-firm, wealthy lawyers. But once again, reality trumps good tax policy. The Missouri Department of Economic Development gave the nearly $3 million to attract the international law firm Sedgwick LLP to downtown Kansas City. Sedgwick is a notable law firm, with offices in 13 cities around the globe. It has over 300 attorneys, and no doubt, lots of revenue, considering its client base and sophisticated practice.

The question begging to be answered is why Missouri would give a bunch of lawyers money. I understand, but still disagree with, the idea of giving tax breaks in the hopes of attracting 10,000 blue-collar jobs at a massive factory. But lawyers? Really? The tax breaks are in the form of refundable income tax credits and notorious retention of employee withholding taxes. So the firm has to withhold income taxes from its employees. The money withheld from the partners’ secretaries doesn't go to Jefferson City to fund state police officers or road construction or even University of Missouri football scholarships. Rather, the partners keep it.

I am a lawyer. I work with lawyers. I teach at a law school. Some of the smartest people I have ever known are lawyers. I just don’t think they deserve a tax break.

Read Comments (3)

Jay StarkmanFeb 11, 2014

AICPA got a similar tax incentive for $6.98 million in 2005 for relocating
about 400 jobs from NY/NJ to Durham, also through withholding tax retention.
Only ten percent of AICPA staff accepted transfer -- with substantial salary
reductions.

David BrunoriFeb 11, 2014

Jay, accountants are marginally more worthy than lawyers. The withholding tax
retention bothers me to no end. I realize that money is fungible, but the idea
of taking money from paychecks is sad.

altamir santosFeb 12, 2014

Robin Hood policy is always on the policy maker's minds.

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