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DelBene Takes Aim at Tax Break for Harassment Settlements

As promised, Rep. Suzan DelBene (D-Wash.) has introduced a bill that would eliminate tax breaks that allow corporations to deduct expenses--settlements, legal fees--associated related to sexual misconduct by their employees.

The Stop Tax Breaks for Sexual Misconduct Act, which would no longer allow corporations to deduct "settlements paid to victims of sexual misconduct, insurance premiums for sexual misconduct policies and associated attorney’s fees as a 'ordinary and necessary expenses.'"

On the victim side of the equation, the bill would also exclude from taxes any damages or settlements in a case of sexual misconduct.

Related: Mandatory Harassment Training Bill Passes House

The bill comes as various very public figures in the worlds of entertainment and politics are facing allegations of sexual misconduct.

“It is coming into sharp focus that for too long settlements have been paid by powerful figures to victims of sexual misconduct in exchange for their signing non-disclosure agreements, keeping perpetrators’ reputations intact and company names out of headlines," DelBene said.

That settlement issue extends to Congress as well, where embattled Sen. John Conyers (D-Mich.) has admitted to settling sexual harassment allegations.

"This payment-for-silence system has protected predators, propped up toxic work environments and prevented potential future victims from being informed and able to protect themselves," the congresswoman said. "It’s shameful that our tax code allows corporations to deduct settlement payments, propagating this rampant problem,” she said. "My bill would make the price for silence steeper for corporations, taking one step toward incentivizing real solutions to end sexual misconduct in the workplace rather than a system of sweeping things under the rug.”

Co-sponsors are Reps. Terri Sewell (D-Ala.) and Judy Chu (D-Calif.). All three are members of the House Ways & Means Committee, which oversees tax policy.