In view of decades of devastating police violence and efforts to reform policing, this Note points to two concurrent phenomena that result in the federal tax code granting benefits to the wealthiest taxpayers who lend to municipalities for police brutality settlements. The first phenomenon is cities electing to issue bonds to satisfy these costly payouts. These bonds have been coined “police brutality bonds.” The second phenomenon is the tax benefit to investors in the top tax brackets for collecting interest from municipal bonds—compared to like private bonds. This Note argues that the federal tax code should not allow wealthy taxpayers to receive tax benefits from funding police brutality bonds. Further, since tax exemption of municipal bonds is a form of federal subsidy, this Note argues that a federal subsidy for police brutality bonds is inappropriate given the legislative intent and economic justification behind tax exemption.

The full text of this Note can be found by clicking the PDF link to the left.


In the summer of 2020, jarring footage of a Minneapolis police officer murdering George Floyd, an unarmed Black man, sparked demonstrations across 140 cities. 1 See Derrick Bryson Taylor, George Floyd Protests: A Timeline, N.Y. Times (Nov. 5, 2021), (on file
with the Columbia Law Review); Catherine Thorbecke, Derek Chauvin Had His Knee
on George Floyd’s Neck for Nearly 9 Minutes, Complaint Says, ABC News (May
29, 2020), [] (“Video of Chauvin pinning Floyd to the ground with his knee pressed into Floyd’s neck went viral earlier this week, sparking widespread protests across the country that have taken a violent turn in Minnesota as outrage mounts.”).
Protestors in Minneapolis called for the police officers responsible for Mr. Floyd’s death to be fired and prosecuted. 2 See Eli Newman, Detroit Police, NAACP Call for Murder Charges Over Death of George Floyd, WDET (May 28, 2020), []. And in July of that summer, Mr. Floyd’s family filed a civil suit against the city of Minneapolis and the police officers, alleging a deprivation of Mr. Floyd’s rights. 3 See Complaint at 27–38, Schaffer v. Chauvin, No. 0:20-cv-01577-SRN-TNL (D. Minn. filed July 15, 2020), 2020 WL 3988441 (alleging three violations of 42 U.S.C. § 1983 (2018) for the murder of George Floyd). The lawsuit   settled   for  $27  million   in  March  2021. 4 Steve Karnowski & Amy Forliti, Floyd Family Agrees to $27M Settlement Amidst
Ex-Cop’s Trial, AP News (Mar. 12, 2021), [

This story—one of police action resulting in devastating human consequences and costing a city a large settlement payout—is not uncommon. The city of Louisville, Kentucky, settled with Breonna Taylor’s family for $12 million in September 2020. 5 Taylor was shot to death by police officers acting on a no-knock warrant.
A Look at Big Settlements in US Police Killings, AP News (Mar. 12, 2021), [].
The city of Cleveland, Ohio, settled with Tamir Rice’s family for $6 million in 2016. 6 Rice, a twelve-year-old boy, was fatally shot by a Cleveland, Ohio, police officer.
Eric Heisig, Tamir Rice Estate’s Multi-Million Dollar Settlement Approved by Probate
Court, (Nov. 30, 2016),
2016/11/tamir_rice_estates_multi-milli.html [].
The city of St. Anthony, Minnesota, settled with Philando Castile’s mother for $3 million in 2017. 7 Castile was fatally shot by a St. Anthony, Minnesota, police officer. Sarah Horner, Philando Castile Family Reaches $3M Settlement in Death, Twin Cities Pioneer Press (June 26, 2017), []. And New York City settled with Eric Garner’s family for $5.9 million in 2015. 8 Garner was killed by a police chokehold. J. David Goodman, Eric Garner Case Is Settled by New York City for $5.9 Million, N.Y. Times (July 13, 2015), (on file with the Columbia Law Review).

Cities have several ways to raise money when they need to satisfy large police brutality payouts. They might have insurance to cover the costs. 9 See, e.g., Horner, supra note 7 (“The settlement . . . will be paid through the city’s coverage with the League of Minnesota Cities Insurance Trust.”); see also infra note 40 and accompanying text. Alternatively, they can pay from the city’s general fund or the city police department’s budget. 10 See infra notes 40, 158 and accompanying text. Or they could sell bonds—coined “police brutality bonds.” 11 Alyxandra Goodwin, Whitney Shepard & Carrie Sloan, Action Ctr. on Race & the Econ., Police Brutality Bonds: How Wall Street Profits From Police Violence 3 (2020), []. When investors buy bonds, they typically have to pay federal income taxes on the interest proceeds. Municipal bonds, however, produce tax-exempt interest. As a result of the exemption and the economics of the bond market, investors in the top tax bracket tend to receive more interest on municipal bonds, such as police brutality bonds, than they would after-tax on corporate bonds. 12 See infra section II.A. Therefore, the Internal Revenue Code (the Code) enables the wealthiest individuals to benefit from the suffering of victims of police brutality.

This Note demonstrates how the Code allows such a tax benefit and why the benefit is worrisome. It then considers proposals on how to eliminate the benefit. In Part I, this Note will demonstrate how and why municipalities face large judgments and settlements for police brutality, 13 See infra sections I.A.1–.2. how municipalities fund these payouts, including by issuing bonds, 14 See infra section I.A.2. and how interest on those bonds is tax exempt. 15 See infra section I.B. In Part II, this Note will show how the Code sanctions a tax benefit for the richest investors for funding police brutality bonds, which is normatively problematic and emblematic of uninformed investing. 16 See infra section II.A. Moreover, because tax exemption is a form of federal subsidy, this Note argues that the use of tax-exempt bonds for police brutality payouts is inconsistent with the legislative intent and economic justification for tax exemption on municipal bonds interest. 17 See infra section II.B. In Part III, this Note will explore ways to limit this tax benefit using existing provisions of the Code. 18 See infra Part III.