How trial lawyers stick your family with a $5,579 ‘hidden tax’ every year

Americans know how much they pay in income, property, and sales taxes. When they receive a paycheck, it is broken down to show exactly how much goes toward Social Security, Medicare, and other taxes. While these costs are transparent, what people don’t see and can’t easily keep track of is how much they pay each year because of abuse of our legal system.The cost of lawsuit abuse doesn’t show up as a deduction from your paycheck or arrive as a bill in the mail. Instead, Americans pay it every day through higher prices for usual goods and services, rising insurance premiums, increased healthcare costs, and more.Depending on where you live, that hidden bill can add up to thousands of dollars a year and is known as a “tort tax.” These costs are staggering and deserve greater attention, particularly during Lawsuit Abuse Awareness Week this October and at a time when affordability remains one of the biggest concerns facing American families. A recent national analysis from Citizens Against Lawsuit Abuse found that lawsuit abuse costs the U.S. economy $602 billion in economic output and more than 5 million jobs each year. That hidden cost amounts to $1,771 per person, or $5,579 for a family of four.Throughout the country, the numbers are staggering. In California, excessive litigation amounts to a “tort tax” of $2,566 per person each year. In Texas, residents pay $1,943, while the annual tort tax reaches $1,306 in Florida, $2,003 in Illinois, and $2,684 in New York.Small businesses lack the resources to spend thousands of dollars defending themselves in court, so they are most often forced to settle even if the claim is not legitimate. While settling may be cheaper than a lengthy legal battle, it is far from cost-free. Spending that money on settling can change everything for a business owner: It can mean raising prices, delaying a new hire, cutting employee hours, putting off an expansion, or even leaving the state entirely for a more business-friendly legal climate. This dynamic is a reality for thousands of businesses and industries across the country, and the consequences burden most families already struggling with the cost of everyday life.This year, however, states across the country have shown that reform is possible, with several recognized nationally in this year’s Legislative HeatCheck report. For example, Kansas enacted legislation limiting certain public nuisance claims and requiring private plaintiffs to prove an actual injury before filing claims. Wisconsin strengthened its standards for expert testimony, empowering judges to filter unreliable evidence that distorts public trust out of the courtroom. In Virginia, Gov. Abigail Spanberger vetoed legislation that would have created the commonwealth’s first state-court class action process. And in California, legislation that could have exposed businesses to additional accessibility lawsuits failed to pass the legislature, while on a positive note, lawmakers advanced separate reforms aimed at curbing litigation over businesses’ use of common website technologies.These reforms address different issues across our civil justice system, but together they demonstrate that progress is possible when lawmakers recognize the impact of lawsuit abuse on businesses, consumers, and the broader economy.AMERICA DOESN’T HAVE AN ENERGY SHORTAGE. WE HAVE A LAWSUIT PROBLEMLawsuit Abuse Awareness Week is about shining a light on the real costs of our broken legal system and building support for reform. Reform does not mean denying justice to those who have legitimately been harmed; it means finding a balance that doesn’t abuse the system and drive up costs for everyone.For more than 25 years, it has been Citizens Against Lawsuit Abuse’s mission to foster that balance. This year’s progress shows reform is possible, but the work is far from over. Americans may never see their “tort tax” printed on a receipt, but they are paying it all the same. Lawmakers should build on this year’s momentum because stopping lawsuit abuse is no longer just a legal issue; it is an affordability issue that impacts everyone.Victor Gomez is the national spokesperson for Citizens Against Lawsuit Abuse and serves as the executive director for California Citizens Against Lawsuit Abuse.