A new tax environment in the offing in New York could lead to increased use of structured attorney fees and structured settlements. Bloomberg reports that next year's budget gap may be $3 billion greater (25% more) than expected just 6 weeks ago and governor David Patterson has hinted that a tax increase on higher incomes is possible.
Add this potential tax increase the one that is surely coming from the Federal government in the foreseeable future and the intrinsic value of existing structured settlements and the desirability of entering into new structured settlements increases.
“We are right now on the verge of cuts and service reductions that I would have to describe as life threatening,” Paterson said to Bloomberg. “With situations like that, everything is on the table,” he said in response to a question about increasing the state’s income tax for high earners.
The Assembly approved an increase on those earning $1 million or more earlier this year that the Senate didn’t consider. Lawmakers in both chambers have proposed various plans to increase tax rates for households with incomes as low as $250,000. The state’s current maximum rate of 6.85 percent applies to those with incomes exceeding $40,000.
If the sliding scale attorney fee schedule is done away with for medical, dental and podiatric malpractice attorneys, as various news reports say is expected, then plaintiff attorneys will enjoy a windfall. Under current law, on a $1,250,000 case (assuming for sake of example no expenses) the attorney fees are currently $275,000 after applying the sliding scale adjustments. If the lawyer's contingent fee commission is increased to one third (as is the case on other types of personal injury litigation) the fee increases to $416,666.67, a difference of $141,666.67. If such a measure passes a plaintiff lawyer used to living on the old scale would be wise to systematically put the windfall away for the future through a structured attorney fee program.
Read more on Structured Attorney Fees here