Opinion ID: 1119219
Heading Depth: 3
Heading Rank: 3

Heading: Impact of Income Taxes On Future Damages.

Text: Consistent with our ruling in Beaulieu v. Elliott, 434 P.2d 665 (Alaska 1967), the trial court instructed the jury that [i]n determining future damages, you may not consider factors such as taxes, increases in wages, or inflation, to alter that sum, either upward or downward. (Emphasis added). Drott now argues that giving this instruction was reversible error, and that this court should overrule Beaulieu. In Beaulieu, we explained our reason for holding that an amount representing future income taxes should not be deducted from the award: Income tax rates, provisions relating to deductions and exemptions, and other aspects of income tax laws and regulations are so subject to change in the future that we believe that a court cannot predict with sufficient certainty just what amounts of money a plaintiff would be obliged to pay in federal and state income taxes on income that he would have earned in the future had it not been for a defendant's tortious conduct. 434 P.2d at 673. Cases holding to the contrary argue that future taxes are no more speculative than other considerations about future losses. Norfolk, 444 U.S. at 494, 100 S.Ct. at 757, 62 L.Ed.2d at 694 (1980); Burlington Northern, Inc. v. Boxberger, 529 F.2d 284, 292-93 (9th Cir.1975). These cases insist that their approach more accurately harmonizes with fair economic reality, more justly achieves the goal of compensating claimants for the actual loss suffered, and safeguards against the injustice of overcompensation. Burlington Northern, Inc., 529 F.2d at 298 (footnotes omitted). The rationale of our holding in Beaulieu remains valid today, and we refuse, therefore, to overrule our decision in that case. If we were to overrule Beaulieu, we would risk making the tax question a collateral trial issue, a result more burdensome than beneficial to the administration of justice. As we recognized in Beaulieu, a court cannot predict [the amount of future taxes] with sufficient certainty. 434 P.2d at 673. Balanced against this consideration is the burden of having to speculate regarding the extent of the plaintiff's future tax liability for his damage award. Therefore, we hold that the trial court did not err when it instructed the jury to disregard income taxes in determining future damages.