N001479
Wednesday, January 09, 2002 3:15 PM
Interim Final Rule/Economic loss calculation
Dear Mr. Feinberg:
I believe there may be at least one significant inconsistency
between the provisions of the economic loss calculations as set forth in
section II(A) (1) and the precise language of the enabling statute. The
guidelines apparently utilized by the Justice Department to calculate
economic loss in Step One of the section referred to above state "This
projected future income is adjusted to account for taxes that would have
been paid. This calculation uses the effective state, federal and local
income tax rates currently applicable in the state of the victim's domicile
for tax purposes." Having evaluated, negotiated and litigated several
thousand wrongful death cases in New York and many other jurisdictions over
the last thirty years, I am aware that there are several jurisdictions that
do not allow for the deduction of federal, state and local taxes from gross
income in computing the net economic loss. New York, the last time I
looked, is one such state. (See Woodling v. The Garrett Corporation, et.
al., 813 F. 2d 543 (2nd Cir., 1987))
The legislation in question directs the Special Master to determine
"economic loss" ...to the extent such loss is allowed under applicable law."
Decided case law clearly indicates that "applicable law" is applicable state
law, not federal law. If that latter phrase is interpreted to apply to the
entirety of that paragraph, and the Congress could have been more specific
if it were not to apply to the whole paragraph, then the statute requires
that taxes not be deducted from gross earnings in determining net pecuniary
loss in most of the cases in question. For a 30 year-old decedent, this tax
deduction greatly reduces the available award.
Individual Comment
Chapel Hill, NC