Tom Harkin: “Today Senator Mack and I, joined by a strong bipartisan group of our colleagues, are introducing legislation that would…”

“Today Senator Mack and I, joined by a strong bipartisan group of our colleagues, are introducing legislation that would prevent tobacco companies from claiming the settlement or judgement payments as a tax-deductible expense, and use the resulting savings to substantially expand our Nation's investment in the search for medical breakthroughs. It is important to note that this common sense proposal is the first major tobacco legislation this year to be introduced with strong bipartisan support. We have 16 cosponsors--8 Democrats and 8 Republicans--and I believe we'll have many more as more of our colleagues have the time to review this bill. Senator Mack and I are also very pleased to have the support of over 170 organizations from across the Nation signed up in support of this plan. During the negotiations that led to the proposed national tobacco settlement, lawyers for the big tobacco companies insisted on a provision stating that 'all payments pursuant to this agreement shall be deemed ordinary and necessary business expenses.' This means that all payments under this proposal, an estimated $368.5 billion over 25 years, would be tax deductible. Thus the industry could write off about 35 percent of the entire settlement payment of $368.5 billion, as well as any future payments or fines. So, if this were allowed to happen, the American people--not Big Tobacco--would be forced to pay approximately $130 billion of the tobacco settlement.”