Poll: Americans object to secret federal settlements

Americans are concerned when regulators reach private settlements with corporations or allow them to write off a portion of the cost of putting charges to bed, according to a new poll.

A survey released Monday by U.S. Public Interest Research Group (US PIRG) found that 71 percent of Americans have some concern about the ability of the government to strike private deals with businesses it accuses of bad behavior. Three-quarters of those polled had some concern, in addition, about the ability of those businesses to write off all or a portion of those settlements come tax time.

The survey comes as some lawmakers on both sides of the aisle have aired criticisms of how the government strikes settlements with alleged bad actors, arguing it lets them skirt public scrutiny or lower their bill on the back of taxpayers.

“The clear message is that Americans want public disclosure of the deals made in their name, and they don’t want these payments written off as tax deductions,” said Phineas Baxandall, senior analyst at the Public Interest Research Group Education Fund.

While criticisms about government settlement practices have largely been the purview of Democrats on Capitol Hill, the poll found bipartisan backing on the matter. Seventy-three percent of Democrats reported concerns about private settlements, compared to 72 percent among Republicans. And 80 percent of Democrats had concerns with tax write-offs for settlements, alongside 75 percent of Republicans.

Support drops when Americans are asked if they want the government to actually change those policies, however. Sixty-two percent of those surveyed want federal agencies to disclose the terms and full financial impact of any settlements, and 52 percent want to restrict corporations’ ability to deduct some of the costs from settlements.

Under existing tax law, penalties and fines are not tax deductible, but any portion of a settlement treated as restitution or compensation can be deducted on the tax bill. When JPMorgan struck a $13 billion settlement with the government over its activities leading up to the financial crisis, many lawmakers and groups cried foul when they learned the bank could deduct up to $7 billion from its taxes thanks to it.

Settlements struck with other companies in the government’s sights, including BP and Toyota, have also allowed the companies to lower their tax bill by entering into them.

Legislation in both the House and Senate have been introduced to bar that practice. Sens. Elizabeth Warren (D-Mass.) and Tom Coburn (R-Okla.) co-sponsored one such measure, pairing a stalwart liberal and staunch conservative on the matter.

The US PIRG poll was conducted by Lake Research Partners over three days in March, and 1,005 adults living in the U.S. were polled.