Sexual Harassers May Lose Their New York Tax Breaks

New York State Assemblymember Linda B. Rosenthal (D-WF/Manhattan) plans to introduce legislation that would eliminate city state tax breaks for companies that knew of  and failed to respond to sexual harassment by one of their employees, or if the company knew about the harassment and engaged in a cover up.  Law360 has the full story here.  Here is an excerpt:

Rosenthal on Monday noted that sexual harassment isn’t unique to the film industry. Accordingly, she said her legislation will include property tax abatements, which are used to encourage construction, and similar tax incentive programs across all industries on the city and state level.

Under the proposed legislation, which is currently being drafted, any company applying for a city or state tax credit would be required to disclose its sexual harassment policy. In addition, the company would have to disclose sexual assault, harassment or discrimination cases within the previous five years involving their employees, Rosenthal said.

If it’s decided that the company has not properly handled those cases, it will not be eligible for the tax benefit, according to the statement.

Whether Pigouvian taxes (meant to discourage activity that has a negative impact on third parties) are good or bad is subject to significant scholarly debate. See, e.g., Jonathan S. Masur and Eric A. Posner, Toward a Pigouvian State, 164 U. Pa. L. Rev. 93 (2015).  But like I tell my students, the tax law is everywhere; it is a powerful tool that can be applied in just about any situation.

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