I’ve heard that a “tort tax” costs a family of four about $3,200 a year in higher prices for products and services.

Ever hear that there are lies, damn lies, and statistics? Well, that $3,200-for-a-family-of-four statistic is based upon a study that found that about 2% of America’s GDP is related to the legal system. Tort reformers use the study to argue that if we could get rid of those expenses, it would be like giving an extra $800 to every American, or $3,200 to a family of four. On its face, that sounds logical, but it really isn’t.

For example, why stop with the legal industry? Since America spends $248 billion a year on advertising, let's gut the ad industry, too - giving another $3,400 to a family of four. And since we’re on a roll, let’s just get rid of the other 96% of the GDP, which would give a family of four over $200,000 per year! That's just silly, and so is the "tort tax" argument.

But there’s another flaw in the “tort tax” argument, too. My doctor recently finished paying off his copier, which was almost $700 a month. But instead of lowering his fees to pass the savings on to his clients, he’s taking that $8,400 a year home to his family, like most people would.

The “tort tax” argument asks you to believe that every time a business reduces its expenses that it will lower prices by the same amount instead of enjoying a higher profit.

Do you?