Which of the following would be the most likely effect of a 75 percent tax on punitive awards by juries?
A) An increase in the number of lawsuits asking for punitive damages
B) A decrease in the number of cases settled out of court
C) An increase in the incentive for plaintiffs to pursue legal action against individuals or businesses who have caused injury due to gross negligence
D) An increase in pretrial settlements since plaintiffs are willing to accept lower settlement amounts that are not taxed

Question

Quizplus · Accepted Answer

A 75 percent tax on punitive awards would likely lead plaintiffs to prefer pretrial settlements to avoid the high tax, thus increasing the likelihood of accepting lower, untaxed settlement amounts.

Which of the Following Would Be the Most Likely Effect