Opinion ID: 2570173
Heading Depth: 3
Heading Rank: 2

Heading: Rationale for Excluding Taxation Evidence

Text: The Washington Supreme Court's decision in Hinzman v. Palmanteer, 81 Wash.2d 327, 501 P.2d 1228, 1232 (1972), exemplifies the rationale employed by those jurisdictions that reject consideration of income tax on probable future earnings. The Hinzman court noted income tax liability or savings is: (1) not pertinent to the damage issue, being a matter between the plaintiff and the taxing authority and of no legal concern to the defendant; (2) the amount of income tax that might become due on one's prospective earnings in future years is too conjectural to be considered in fixing damages; and (3) to introduce an income tax matter into a lawsuit for damages would be unduly complicating and confusing. Id.; see also, e.g., Hicks v. Jones, 217 W.Va. 107, 617 S.E.2d 457, 464-65 (2005) (holding that, in calculating a plaintiff's damages for accrued loss of earnings or for impairment of future earning capacity because of personal injuries, the award of damages should be based on the plaintiff's gross earnings). [3] In Johnson v. Manhattan & Bronx Surface Transit Operating Authority, 71 N.Y.2d 198, 524 N.Y.S.2d 415, 519 N.E.2d 326, 329 (1988), the New York Court of Appeals observed in a wrongful death case that a majority of jurisdictions have stayed with a rule precluding evidence of after-tax income on the earnings damage issue to avoid turning every negligence case into a trial (at least) of the future federal income tax structure involving a parade of tax experts. In fact, our decisions generally consider tax returns to be irrelevant and not discoverable on the question of present and future damages in personal injury actions. See Alcon v. Spicer, 113 P.3d 735, 742-43 (Colo.2005); Corbetta v. Albertson's, Inc., 975 P.2d 718, 722-23 (Colo. 1999) (addressing exemplary damages). We have relied on the legislative policy of the Colorado General Assembly for such holdings. See Alcon, 113 P.3d at 743; Corbetta, 975 P.2d at 722-23.