Senator Robert Menendez, a Democrat from New Jersey, proposed the amendment last month. It says any settlement, payout or lawyer’s fees related to sexual harassment or sexual abuse could not be deducted as a business expense if such payments were subject to a nondisclosure agreement.
“I think most Americans would be outraged to know that they are subsidizing sexual predators in the tax code,” he said in an emailed statement.
But the proposed changes may not deter some companies and businesses from seeking confidentiality.
“This is a nudge, not a hammer,” Daniel Hemel, an assistant professor at the University of Chicago Law School and an expert in tax policy, said in a phone interview on Saturday.