The Real Debate About Taxing Lawyers


One would have thought that the British had reasserted their right to tax tea the other day. I was sitting in a judge's chambers hammering away about some arcane issues in a pending criminal case. The prosecutor hammered back. We decided to step back for a moment, and change our angle of vision. So someone started talking about the Attorney Occupation Tax. A public defender was present in the room. Things went from tactical war over limited issues to a battle to death. Even the judge seemed angered over the prospect of an increased tax on lawyers.

I am nonplussed.

We pay a per capita occupational tax of $450 per year in the State of Connecticut. I pay it for the four lawyers working with me as a benefit of employment. Lawmakers want to increase the tax to $640 as a means of yielding revenue in tough times. Somehow news of that strikes me with about as much force as learning the Madonna has breast enhancements.

But the prosecutor and public defender were furious. They are public employees. This tax cut to the bone. They will bleed. It is unfair. Why, sputter, fuss, fume, there ought to be a law.

Taxation of lawyers is controversial in Connecticut just now. Lawmakers recently raided a trust fund created by the Judicial Department for reimbursement of defrauded clients and crisis intervention for impaired lawyers. Late one night and without debate, the Legislature drafted a bill seizing the funds. Without blinking an eye, the governor signed the bill. Poof. Two million dollars gone, and more to come in the future. After weeks of chest-thumping the Connecticut Bar Association conscripted a band of the state's most vanilla lawyers to serve as plaintiffs in a class action suit to challenge the seizure of funds. I applaud the litigation, but I worry about the consequences of success.

Consider: Lawmakers need money. They seize a trust fund. Lawyers sue. The lawyers win the suit and the $2 million is placed back in trust. Then lawmakers decide to raise the occupational tax. Lawyers fuss rage and fume. Perhaps the tax is fought back.

What's the message here? Don't tread on us?

Lawyers aren't exactly popular. We exist because things get broken. Being a lawyer is simply defined as being an ambassador for other people's troubles. But that does not mean we are exempt from the hard times that befall us all. Don't lawyers, too, share some measure of responsibility to the community at large?

We'll bitch about the seizure of trust funds. We'll war over a trifling increase on a tax attendant to the privilege of practicing law. And how will lawmaker's respond? I suspect with a growing impatience that will only yield a less temperate response: Something else will get taxed.

The tax on the occupation is hardly offensive. When I hear a public defender assert that the tax is somehow unfair because they don't charge their client money, I am not moved. Lawyers are lucky. We make good livings as a result of the degrees and skills we possess. If, as a general matter, the state needs a couple of hundred bucks more next year to make ends meet, I don't feel abused by kicking in some dough.

But, as always, a small voice flickers somewhere inside me accusing me of hypocrisy. Increase my taxes and I will simply increase my fees. Public defenders can't do that. But "silence," I say to that small voice of scorn. "Neither do public defenders have to hussle for a fee to make ends meet." Imagine never again having to ask a client to pay his or her bill.

Times are tough. The state needs money. The state will get it one way of the other. An increased occupational tax strikes me as the least objectionable means of doing so. One way or another, the taxman cometh. Pick your poison, but please don't argue that we should, as a class, be spared the bitter pill all must swallow in hard times.

Comments: (3)

  • Norm, There are a couple of additional problems w...
    Norm, There are a couple of additional problems with the occupational tax on judges, prosecutors and public defenders. First, you're forgetting that we are in the midst of negotiations with the State that will give back several hundred million dollars in wage and benefit concessions. It is likely that not only will our incomes shrink, we'll be paying quite a bit more for health insurance and receiving lesser coverage. To add a regressive tax on top of what we will already be giving up seems like piling on. Next, I don't object to the tax for government lawyers with private practices. For instance, DCF and DPUC attorneys are allowed to practice outside. Judges and Prosecutors (and I think PD's) are prohibited by statute from practicing law. We can't raise fees or take the marginal case we might not otherwise have taken. In short, we end up squeezed on both ends.Finally, you show a flash of what you have to admit is a quite privileged socio-economic position. $640 may not be a big deal to you, but for a new prosecutor or pd, it amounts to four days of take home pay. On top of the thousands they will already be giving up in concessions, it's significant.Brian Preleski
    Posted on April 2, 2009 at 1:21 am by Anonymous
  • I think Brian was saying this too, but if PD and p...
    I think Brian was saying this too, but if PD and prosecutor salaries are the result of a bargaining process, then an increase in occupational tax is roughly the same as the legislature reneging on the agreement. It's bad faith. It's as if you did some legal work for the owner of the building where you rent your office, and he paid you but then raised the rent a lot to get some of his money back.
    Posted on April 2, 2009 at 7:26 am by mdraughn
  • Lawyers are forgetting something fundamental: The ...
    Lawyers are forgetting something fundamental: The practice of law is a monopoly. The State Bar ensures that no one engages in the unauthorized practice of law - which means that people not licensed by the State of Connecticut may not appear in court, or represent clients. The State Bar provides job for lawyers by preventing others from competing in a fair labor market. "Union workers only" could be the slogan.$640 for monopolistic protections? Seems like a bargain to me.
    Posted on April 2, 2009 at 8:54 am by Mike

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