Arlington, VA-The American Consumer Institute (ACI) joined a broad coalition of taxpayer, consumer, and free-market organizations urging Congress to close a tax loophole benefiting third-party litigation financiers (TPLF). The letter calls on lawmakers to ensure that profits from litigation financing are taxed as ordinary income rather than receiving preferential capital gains treatment, arguing that the current approach allows largely foreign investors to extract windfall profits from the U.S. legal system. The coalition warns that this growing, multi-billion-dollar industry imposes real costs on American households—estimated at more than $600 per year—while encouraging increased litigation, higher legal expenses, and upward pressure on consumer prices. It further notes that closing the loophole could generate an estimated $3.5 billion in revenue and reduce unnecessary costs on taxpayers and businesses.
Read the coalition letter here.
For media inquiries, please email [email protected]
The American Consumer Institute is a nonprofit education and researc