Under GOP Senate tax plan businesses would be taxed on sexual harassment payments

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Fox News paid tens of millions of dollars - all of which was tax deductible - in sexual harassment settlements on behalf of former host Bill O'Reilly.

• In their tax proposal, Senate Republicans are eliminating tax deductions for payments made by businesses in relation to sexual harassment settlements.
• Advocates of the move say it will discourage employers from protecting alleged perpetrators of workplace sexual harassment.
• The change will bring in less than $50 million in additional tax revenue over the next decade.

When Fox News paid tens of millions of dollars to women who accused the network's chief, Roger Ailes, and top host Bill O'Reilly of years of sexual misconduct, the network was not required to pay taxes on the payments, which were considered tax-deductible business expenses.

In their new tax proposal, Senate Republicans are trying to change that, prohibiting deductions for settlements, payouts, or attorney fees related to sexual harassment or abuse if the payments are subject to a non-disclosure agreement, which is a pledge of confidentiality.

Under current law, businesses can avoid paying taxes on the money they secretly pay to alleged victims of sexual harassment committed by their employees. And the attorney fees and other related costs businesses incur as part of these disputes are also considered ordinary business expenditures and therefore not taxable.

Section 162 of the present US tax code currently only excludes deductions for bribe payments, healthcare fraud, lobbying payments and any fines paid to the government for breaking the law.

The clause will likely be popular among voters, particularly with national attention being paid to high-profile allegations of sexual assault and harassment against prominent men in Hollywood, the media, and politics.

Advocates of making sexual harassment payments taxable argue that making it more expensive for companies to secretly pay off alleged victims will give them more of an incentive to root out the bad behavior and reduce the likelihood that harassment will occur.

But the change will bring in less than $50 million in additional tax revenue over the next decade, the Joint Committee on Taxation estimates.