OPINION
Suit in thе District Court was instituted under the Federal Employers’ Liability Act [F.E.L.A.], 45 U.S.C. §§ 51-60. Originally three separate actions were filed against the appellant railroad, one for the death of an engineer (Ritter), a second for the death of a fireman (Box-berger), and the third, for injury to a brakeman (Stanwood). At the time of the accident that gave rise to the suit, Ritter, Boxberger, and Stanwood were employees of the appellant. A collision occurred between a locomotive operated by these employees and a chain of boxcars escaping from the appellant’s railroad yard in Bend, Oregon. The three cases were consolidated, and at the outset of the trial the railroad admitted liability, leaving the amount of damages as the only issue for trial. Early in the trial the claim of the injured brakeman was resolved by compromise. A jury verdict was rendered in the two remaining cases, and the judgment in favor of the survivors of the engineer (Ritter) was satisfied.
This appeal relates only to the jury’s verdict awarding $335,000 for the death of Boxberger. Following entry of judgment for $335,000 on the jury’s verdict, •the railroad moved for a new trial or, in the alternative, for a reduction of the Boxberger verdict. The District Court denied the railroad’s motion and this appeal followed.
I. Issues on Appeal
On this appeal, the appellant raises three issues. The railroad argues that (1) the court committed prejudicial error in receiving the testimony of an expert economist presented by the Boxberger plaintiff; (2) it was error for the trial court to refuse to admit evidence of the amount of personal income tax which would have been payable from the gross earnings of the decedent, had he lived, and (3) it was error for the trial court to refuse to give the appellant’s requested jury instruction No. 7, which read: “Any award to plaintiff will not be subject to federal income tax and therefore you should not add or subtract for such taxes in fixing the amount of any award.”
II. The Expert’s Testimony
The sole expert witness in the case of Boxberger as to the economic loss was a 34-year-old professor specializing in labor economics at the University of Washington. The expert had received his Ph.D. in economics from Columbia University, and his doctoral dissertation involved a study of earnings profiles for workers in specific occupations. Since this case was his first as an expert witness in the valuation of a decedent’s loss of future income, the trial court questioned him outside the presence of the jury as to the basis for his calculations. The appellant contends that this voir dire examination of the expert made it apparent that several major assumptions governing the validity of his opinion were either false or would not be established at trial. The appellant further argues that during the course of the trial it was clearly demonstrated that certain assumptions essential to the validity of the expert’s opinion were not established and that the assumptions were proved to be false. Therefore, the railroad contends, the expert’s testimony should not have been received and, since the ex *287 pert’s opinion was the only evidence of the alleged total value of the lost pecuniary benefits, the trial court committed prejudicial error in failing to grant a new trial or, alternatively, to reduce the amount of the verdict.
The expert testified that, taking a current annual earnings figure of $18,048, the discounted present value of Boxber-ger’s future earnings, had he lived, would amount to a minimum of $480,500. The appellant challenges several elements of these calculations, in addition to the general qualifications of the witness and the “starting point” of $18,048 in annual earnings. First, the expert deducted a maximum of 30% for the projected personal consumption of Box-berger had he lived. This was based on statistical studies of the personal consumption habits of the heads of similar households (i. e., an earning husband with a wife and three children). The appellant objects to the fact that the expert did not obtain information about the actual consumption habits of Boxber-ger, but instead relied upon statistical studies that the expert had obtained from a fellow professor. The appellant also challenges the expert’s assumption that Boxbеrger spent 15 hours per week engaged in non-market family services (household chores, etc.), on the grounds that the widow did not affirmatively testify that this was a correct estimate. The appellant disputes the assumption that a 4.8% compound annual increase in railroad employees’ earnings was probable over the next 34 years, an estimate which the expert based upon government data on the average earnings of railroad engineers. Finally, the appellant contends that the expert erred in failing to take account of any income tax impact and accordingly basing his conclusions entirely on gross income.
We have carefully considered each of the alleged defects in the expert’s calculations. Our court has consistently followed the general rule that the admission of expert testimony generally lies within the sound discretion of the trial court. “It is for the trial court to determine, in the exercise of its discretion, whether the expert’s sources of information are sufficiently reliable to warrant reception of the opinion. If the court so finds, the opinion may be expressed.”
Standard Oil Co. of California v. Moore,
III. Evidence of the Impact of Income Taxes on Future Earnings
We next consider an issue that has caused a great deal of controversy among the courts that have considered it. Our Circuit has dealt with the question in a number of cases, but we have never hitherto adopted a clear rule for uniform application. We refer to the question of whether the measure of recovery for loss of earnings in a personal injury case should be calculated on the basis of probable future gross earnings or estimated future net earnings after *288 the deduction of income tаxes. In the context of the case now before us, the question presented is whether the trial court erred in refusing to admit evidence of the impact of income taxes on probable future earnings of the deceased. The appellant argues that by virtue of this award the Boxberger beneficiaries will be unjustly enriched, receiving substantially more than they would have had the accident not occurred and had Boxberger’s future gross earnings been subjected to income taxes imposed by the United States and the State of Oregon.
A. Prior Cases
Our court first considered the question of deduction of. future income taxes in
Southern Pacific Co. v. Guthrie,
“Appellant argues that in any calculation of loss of earnings we must throw out the amounts to be paid in taxes, in other words, confinе his loss to his reasonably to be expected ‘take-home’ pay. Counsel for Guthrie challenge this, as they say the amount of taxes is purely speculative, and cite Stokes v. United States, 2 Cir.,144 F.2d 82 , which seems to support them. We think, however, that for the expected period of Guthrie’s life, he would have found taxes fully as certain as his prospect of continued earnings.”180 F.2d at 302 .
On rehearing en banc, we again affirmed the trial judge’s refusal to grant a new trial based on the excessiveness of the verdict. However, in the intermediate step wherein that portion of the award corresponding to lost earnings was calculated, we wrote:
“We are now persuaded that the figure $55,515.74 should be enlarged, somewhat, and in two respects. . We think the court’s view that the net take home pay, after taxes, would represent the actual loss, is correct; but we are now convinced that we cannot tell how much this would be.
What Guthrie’s ultimate earnings, net or gross, would be, cannot be foretold. While it may be prophesied that during his lifetime income taxes will continue, there is not equal certainty as to their impact on him. In Chicago & N. W. Ry. Co. v. Curl, 8 Cir.,178 F.2d 497 , 502, the court held it not prejudicial error to refuse evidence of the amount of income tax and other deductions, because of the inherent uncertainty in such matters, saying, ‘We may assume that the jury were aware of * * * the fact that average earnings, net or gross, of the appellee for the future could not be definitely known.’ ”186 F.2d at 927-28 .
We went on to say that because of the uncertainties mentioned, the lost earnings were “somewhere between” the $55,515.74 (net) and $63,778.33 (gross), and that consequently the court could not assume that the trial judge was wrong in stating that the figure “ex
*289
ceeded $60,000.”
Our court has also considered the question in a number of cases under the Federal Tort Claims Act, 28 U.S.C. § 2674. Unlike F.E.L.A. cases, which are subjеct to federal law
(Urie v. Thompson,
In the other Circuits, the leading case is the oft-cited
en banc
decision of the Second Circuit in
McWeeney v. New York, N.H. & H.R.R. Co.,
McWeeney did not hold that there should be no deduction for future income taxes in all cases. Rather, Judge Friendly, in speaking for the majority, adopted a flexible rule:
“There may be cases where failure to make some adjustment for the portion of a plaintiff’s or decedent’s earnings that would have been taken by income taxes would produce an improper result; but these are at the opposite end of the income spectrum from McWeeney’s.”282 F.2d at 38 .
Thus, in subsequent cases,
McWeeney
has been interprеted to hold that in cases wherein the injured parties’ income is beyond the “lower or middle reach of the income scale” (
Some more certain specificity has been added to the
McWeeney
rule in subsequent cases. In the Second Circuit, income taxes have not been deducted in cases wherein the annual gross income in question amounted to $4,800
(McWeeney, supra),
$6,300
(Cunningham v. Rederiet Vindeggen A/S,
A particularly instructive case on the operation of the flexible
McWeeney
principle is the Seventh Circuit’s opinion in
Cox v. Northwest Airlines, Inc.,
“. . .No reduction was made for income tax the decedent would have paid on the earnings and incomе so attributed to this twenty-year period. The deceased’s beneficiaries could not logically and reasonably have expected to receive the money he would have paid in such taxes had he lived. Only the net income would have been available for their support. And there can be no pecuniary loss of income which would not have been available for contribution.
% $ * Sfc Sfc
This is a case where the impact of income tax has a significant and substantial effect in the computation of probable future contributions and may not be ignored. While mathematical certainty is not possible, any more than it is in a prognosis of life expectancy and probable future earnings, nevertheless, an estimate may be made *291 based generally on current rates, from which there should be computed the future income of thе deceased after payment of Federal Income Taxes rather than before.”379 F.2d at 896 .
The Second Circuit has held that the
McWeeney
Rule should be followed in all cases “where the question is one of federal law or the applicable state law is silent.”
Petition of Marina Mercante Nicaraguense, S.A.,
B. Analysis
Any fair analysis should begin with the just and elementary rule that “[t]he primary aim in measuring damages has been compensation, and this contemplates that the damages for a tort should place the injured person as nearly as possible in the condition he would have occupied had the wrong not occurred. . . .” C. McCormack, Law of Damages 560 (1935). It is thus well established that the measure of damаges in an F.E.L.A. case is the pecuniary loss to the beneficiaries, the amount that they reasonably could have expected to have been applied to their benefit had the decedent lived.
Norfolk & Western Ry. Co. v. Holbrook,
Given the undeniable fact that the question is what amount would have been available to the survivors for support from the decedent’s earnings if the decedent had not been killed, we believe it altogether right and proper that in cases wherein the annual gross income is such that future taxes would have a substantial effect, evidence of the decedent’s past and future tax liability should be admitted if a reasonably fair and accurate estimate of his lоst future income is to be assured. As our Judge Duniway wrote in
United States v. Fu-
*292
rumizo,
Although we find the logic of the foregoing irrefutable, we think it fair to note what we perceive to be fallacies in the objections that have been raised to permitting evidence of net future income, rather than only gross income. The primary objection is that to permit a deduction of future tax liability involves too much speculation and uncertainty. We can give no better reply to this argument than the rebuttal written by two noted torts scholars almost twenty years ago:
“. . . the argument is weak. In the first place it has no proper application to damages for past losses. In measuring them the tax can be computed and should be deducted. Moreover future taxes are no more speculative than many other items that go into prophecies about future losses in this uncertain world of ours — witness the future earnings of a young child or the future trends in the dollar’s value. As long as our system stays wedded to the single lump sum recovery, our courts simply have to speculate about the uncertainties of the future. With anything as sure as “death and taxes” the courts are avoiding their responsibilities when they decline to make the best guess they can, once all the reasonably available evidence is brought before them. It is noteworthy that the British House of Lords has recently held that damages for past and prospective earnings should be based on estimated net income after taxes.” II F. Harper & F. James, Law of Torts § 25.12 (1956) (footnotes omitted). 3
We can see absolutely no reason why a court cannot admit evidence of the tax payments that a decedent or an injured earner would have been required to make, taking judicial notice of the сurrent tax rates, and cautioning the jury to consider future changes in expense deductions, the age of dependents and corresponding exemptions for them, and the like. While not subject to precise mathematical exactitude, such a projection does not appear to be too un *293 certain, conjectural, or speculative 4 for the jury to consider. Certainly, such considerations are no more speculative than the possibility of death from natural causes, disabling, non-compensable injuries from other causes, or the future instability of familial relationships.
A second contention is that calculation of future tax liability would be too complex a task for the average jury. But today’s sophisticated jurors surely have had some personal experience in determining their own tax liability, and in today’s tax - conscious society we are confident that our juriеs and judges, with the aid of such competent expert testimony as may be received, are equal to the task and the responsibility.
Finally, it is argued that failure to consider the impact of future taxation is offset by two other factors that the jury does not consider, which tend to under-compensate plaintiffs for their injury: the impact of future inflation and the fact that the plaintiff bears the cost of his own attorneys’ fees. As to inflation, that factor was implicitly included here in the estimate of the decedent’s loss of future earnings, and thus considered by the jury, because the expert’s calculations included a 4.8% annual increase in the earnings of railroad engineers (this based on the historical annual increase in earnings in the railroad industry).
5
By use of this factor in the plaintiff’s calculations, it was estimated that Boxberger, who was earning no more than $18,048 per year at the time of his death, would be earning almost $40,000 per year near the end of his anticipated life work expectancy of 34 years. Moreover, we have clearly held, in
United States v. English,
Unlike inflation and taxation, both of which would most assuredly have occurred had the decedent lived, the impact of plaintiff’s attorneys’ fees has no relation to the jury’s task of estimating *294 what the decedent’s survivors would have received from the decedent if the accident had not occurred. Attorneys’ fees simply are not relevant in the calculation of what the plaintiff would have received if the decedent had survived, and it would be no more logical to remind the jury that plaintiff will pay attorneys’ fees, in hopes that the award might be increased, than to remind the jury that the defendant will have the additional expense of paying his attorneys, in hopes that the jury will be influenced to decrease the award. Attorneys’ fees are related to private contracts between the litigants and the attorneys. They have, no legitimate relevancy to the issue as to what amount of money is justly compensatory for the loss resulting from the defendant’s tortious act.
We conclude that, as a matter of fairness and logic, the just approach would require a rule providing for the admissibility of evidеnce of, and corresponding deduction to account for, future income taxes in a
11
cases. But our adoption of such a broad rule would place our court in conflict with a number of other Circuits that have endorsed the flexible
McWeeney
approach, allowing the trial judge to refuse evidence of future income taxes in circumstances wherein the estimate of future gross income is relatively modest. We think it is clear, however, that, even under the flexible
McWeeney
rule, as that has been refined in subsequent decisions, a case involving an income span of $18,048 to $40,000 in annual earnings is a case wherein “the impact of income taxes has a significant substantial effect in the computation of probable future contributions and may not be ignored.”
Cox v. Northwest Airlines, Inc.,
Applying the McWeeney approach as it has now evolved, Boxberger’s estimated future earnings span of $18,048 to $40,000 fits into the category of Cox’s 6 $15,655-$20,608 and LeRoy’s 7 $16,000-$25,000, in which the impact of future taxes was substantial, rather than in the category of McWeeney’s 8 $4,800, Cunningham’s 9 $6,300, and Montellier’s 10 $11,150, in all three of which impact of future taxation for a married taxpayer with children approached de minimis proportions.
We do not necessarily here conclude that the jury’s verdict of $335,000 in this ease was, in the aggregate, so “grossly excessive” or “monstrous” as to shock our sense of judicial conscience.
See Vannoy v. Chicago, Burlington & Quincy R. R. Co.,
Here, the record demonstrates beyond doubt that the trial court’s exclusion of *295 any evidence of future income taxes seriously prejudiced the appellants. The award substantially exceeded what the beneficiaries would have received had Boxberger lived, due to overcompensation in the form of pretax dollars that the survivors would never have received had the accident not occurred. At 1974 tax rates, using standard deductions, a married man earning $18,048 and claiming five exemptions would owe approximately 14% of his earnings in federal income taxes. Toward the end of his work life, based on a $40,000 income with two exemptions (the children having reached majority), the tax liability would rise to approximately 28%. Thus the award in this case possibly exceeded, by approximately 14-28%, that which it would have been had future income taxes been taken into account.
It is hardly unreasonable to assume that, had the jury heard evidence of the deceased’s tax liability on his alleged future earnings, the jury, under appropriate instructions, would have reduced the award to account for the future taxes that would have been paid. The court instructed the jury:
“Pecuniary loss is the value of those benefits measured in dollars which they, that is the plaintiffs, the widow and children in the case of Mr. Box-berger, which they reasonably could have expected to receive from the decedents had the decedents lives not been terminated.” (Emphasis added).
The jury was expressly cautioned to consider:
“. . . what their [the decedents] personal expenses and other charges and deductions against their earnings were and what they would be expected to be in the future and any other fact shown by the evidence as throws light upon the question of what pecuniary benefits each beneficiary might reasonably have been expected to receive from the decedents had they lived beyond the death in question.” (Emphasis added).
Therefore, since the trial judge’s decision to exclude all evidence of the taxes due on the decedent’s future earnings necessarily resulted in an inflated award (i. e., more than was necessary fairly to compensate plaintiffs for their actual loss), we reverse and remand for a new trial, at which time evidence of future income tax liability will be admissible. In line with the Second Circuit, we hold that in cases wherein the gross earnings in question are beyond “the lower or middle reach of the income scale,” and consequently “the impact of income tax has a significant and substantial effect in the computation of probable future contributions” to the beneficiaries, both parties should be permitted to introduce evidence of the extent to which future earnings would have been taxed.
IV. Instruction Re: Non-Taxability of Awards for Personal Injury
The final issue is whether a jury should be instructed that awards received in personal injury or wrongful death actions are not taxable under the Federal income tax laws. 11 The appellant argues that, aside from whether taxes are deducted in computing lost earnings, there is also a significant risk that a jury in today’s tax-conscious society will erroneously assume that the ’award will be taxable and thus will increase the award to make it big enough “so that plaintiff would get what they think he deserves after the imaginary tax is taken out of it.” II Harper & James, Law of Torts § 25.12 (1956). The argument is well taken.
*296 Some courts have confused this question with the question of the admissibility of evidence of future income tax liability, but the issues are analytically distinct. Assuming, for example, that the lost future earnings of a decedent would have been $100,000 per year and his tax liability on those еarnings would have been $30,000, and further assuming that he could have worked one more year had the accident not occurred, calculation on the basis of net income should prevent an unjust and erroneous award of a $30,-000 windfall (i. e., from awarding $100,-000 total), an additional $30,000 that would not have been retained by the family had the accident not occurred. However, there is still the altogether reasonable probability that a tax-conscious jury, justifiably ignorant of the income tax exemption, would erroneously assume that the judgment would be taxable and consequently award an additional amount to compensate for the imaginary tax. Thus, in our example, a jury that is not allowed to hear evidence of future income tax, and which also erroneously assumes that the award will be taxable, may quite likely award $130,-000 that the plaintiff will receive a double tax windfall, amounting to $60,000 more than would have been allowed had there been no accident. 12
The majority of American jurisdictions that have considered the question have ruled that refusal to give the instruction is not error,
13
at least absent some affirmative evidence that the jury had improperly increased the award to compensate for the supposed, but non-existent, tax reduction. The issue has also generated extensive analysis by legal commentators, with the overwhelming majority favoring the giving of such an instruction rather than concealing a relevant truth from the jury.
14
Our Circuit appears never to have expressly resolved the issue.
15
Four Circuits have upheld the trial judge’s refusal to give an instruction that the award is non-taxable
(Nichols v. Marshall,
The Third Circuit, recognizing the almost certain fact that a jury will erroneously аssume the award itself is taxable if it is not instructed otherwise, held in Domeracki, supra, that trial courts in personal injury actions must instruct the jury that any award will not be subject to personal income taxes (and that the jury should not, therefore, add or subtract taxes after fixing the amount of the award). The sound reasons for informing the jury of the true tax consequences are well summarized in the following passage from Domeracki:
“Moreover, there are positive and persuasive reasons for giving the instruction. We are not unaware of the pervasive impact of taxation — federal, state, and local — in the lives of Americans. It has been properly observed that what we know as men, we should not ignore as judges. We know of the widespread attention given by the media to the tax consequences affecting winners of the Irish Sweepstakes, state-conducted lotteries, and contеsts conducted on television. We take judicial notice of the “tax consciousness” of the American public. Yet we also recognize . . . that few members of the general public are aware of the special statutory exception for personal injury awards contained in the Internal Revenue Code.
******
The very purpose of a cautionary instruction is merely to dispel a possible misconception in the minds of the jury that the government will make a valid claim to a portion of the award. Its effect is simply to dissuade juries from improperly increasing the award because of this mistaken belief.”443 F.2d at 1251 (citations omitted).
We find ourselves in complete agreement with these sentiments. We cannot believe that, in the absence of such an instruction, many jurors would not assume that the award would be taxable and thus be inclined to increase their damagе award accordingly. The benefits of informing the jury of the true tax consequences are so clear, and the burden in terms of time and the possibility of confusion so minimal, that we believe the balance is overwhelmingly in favor of giving such an instruction. To put the matter simply, giving the instruction can do no harm, and it can certainly help by preventing the jury from inflating the award and thus overcompensating the plaintiff on the basis of an erroneous assumption that the judgment will be taxable. Therefore, in future personal injury actions brought under the F.E. L.A. in our Circuit, the trial courts, at least when appropriately requested, must instruct juries that any award made for lost future earnings is not subject to personal income taxes.
The trial court’s denial of both of the appellant’s requests (to present evidence of the impact of future income taxation on future earnings, and tо instruct the jury that the earnings award would not be taxable) had the possible effect of overcompensating the claimants by twice awarding taxes — once by using gross income to measure lost earnings and a second time, if the award was increased upon the fallacious assumption that an additional increment was needed to compensate for income taxes to be paid from the award.
The judgment is reversed, and the cause is remanded for a new trial on the issue of damages alone. Competent evidence of the impact of income taxes upon the decedent’s alleged future earnings, if tendered, will be received, and the jury will be instructed as to the nontaxable status of the lost earnings por *298 tion of a damage award. 17 This approach more accurately harmonizes with fair economic reality, more justly achieves the gоal of compensating claimants for the actual loss suffered, and safeguards against the injustice of overcompensation. 18
Reversed and remanded.
Notes
.
See
Annot.,
. See II Harper & James, Law of Torts § 25.12 (1956); Nordstrom, Income Taxes and Personal Injury Awards, 19 Ohio St.L.J. 212 (1958); Burns, A Compensation Award for Personal Injury or Wrongful Death is Tax-Exempt: Should We Tell the Jury?, 14 DePaul L.Rev. 320 (1965); Morris & Nordstrom, Personal Injury Recoveries and the Federal Income Tax Law, 56 A.B.A.J. 274 (1960); Stripp & Rowland, Taking Account of the Impact of Income Taxes in Personal Injury and Wrongful Death Cases —Recent Developments, 36 Ins.Counsel J. 231 (1969); Note, 50 Ky.L.Rev. 601 (1962).
.In England the courts follow the rule that the jury must consider the taxability of future earnings in calculating loss of earnings. See British Transport Comm. v. Gourley, [1956] A.C. 185, 3 All.E.R. 796, overruling Bellingham v. Hughes, 1 K.B. 643 (C.A.1949). In Gourley, Lord Goddard, writing for the majority, held that income tax consequences must be considered in fixing damages for past or future lost earnings because, if the plaintiff had not been injured but had earned the amounts represented by the award, it is clear that these earnings would have been subject to taxation.
. One commentator has pointed out that even if it be conceded that prediction of future tax liability is somewhat speculative, that is not a compelling reason for refusing to consider such evidence:
“This conjecture and speculation could be found in such things as: (1) the family status of the injured party in the years to come; (2) possible changes in the exemption and deduction provisions of the tax law; (3) possible changes in the rates of taxation; and (4) possible changes in the cost of living, thus reflecting itself on the income of the plaintiff. These items are speculative. But are they so speculative that we should refuse to let the defendant even try to show them? Indeed, which is more conjectural: the existence of income tax in this country along the pattern we now know it, or the continuance of the plaintiff’s salary during exactly the same period? Yet, we have no real difficulty in letting the jury speculate as to the existence of the latter. We will even let the plaintiff try to show that he might have earned more salary in the future. If the plaintiff received the advantage of the speculation in his favor, why do we bar the defendant from even trying to show what appears to be a smaller speculation in his favor?
Nordstrom, Income Taxes and Personal Injury Awards, 19 Ohio St.L.J. 212, 227 (1958).
.
.
.
.
.
. The court in
United States v. English,
“The . . . projected annual increase which was used to compute an estimate of decedent’s lost gross earnings was based on the earnings growth history of persons employed in. contract construction. It is axiomatic that a projection of future earnings which is based upon the ‘regression,’ or ‘time series analysis,’ of raw data about past earnings and past increases in earnings which were themselves affected by inflationary pressures, and which are unadjusted to remove the inflationary bias, will result in a future projection which incorporates the assumption that there will be future inflation similar to that of the past several years.”521 F.2d 63 , 71 n. 5.
. Section 104 of the Internal Revenue Code of 1954, 26 U.S.C. § 104 provides:
“(a) In general. — Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any pri- or taxable year, gross income does not include—
******
(2) The amount of any damages received (whether by suit or agreement) on account of personal injuries or sickness. * * * ”
. See Note, 56 Minn.L.Rev. 503, 506 n. 21 (1972).
. See Note 1, supra.
. See II Harper & James, Law of Torts § 25.-12, at 1327-28 (1956); Burns, A Compensation Award for Personal Injury or Wrongful Death is Tax-Exempt: Should We Tell The Jury?, 14 DePaul L.Rev. 320 (1965); Feldman, Personal Injury Awards: Should Tax Exempt Status Be Ignored?, 7 Ariz.L.Rev. 272 (1965); Henderson, Some Recent Decisions on Damages: With Special Reference to Questions of Inflation and Income Taxes, Ins.Counsel J. 423 (1973); Morris, Should Juries in Personal Injury Cases Be Instructed that Plaintiff’s Recoveries Are Not Income Within the Meaning of the Federal Tax Law?, 3 Defense L.J. 3 (1958); Nordstrom, Income Taxes and Personal Injury Awards, 19 Ohio St.L.J. 212 (1958); Stripp & Rowland, Taking Account of the Impact of Income Taxes in Personal Injury and Wrongful Death Case— Recent Developments, 36 Ins.Counsel J. 231 (1969); 26 Ford.L.Rev. 98 (1957); 42 Geo.L.J. 149 (1953); 50 Ky.L.J. 601 (1962); 44 Ky.L.J. 384 (1956); 56 Minn.L.Rev. 503 (1972); 33 Ohio St.L.J. 972 (1973); 32 Tex.L.Rev. 108 (1953); 8 Tulsa L.J. 242 (1972); 4 U.C.L.A.L.Rev. 636 (1957); 25 U.Cin.L.Rev. 385 (1956); 9 Vand.L.Rev. 543 (1956); 11 Wash. & Lee L.Rev. 66 (1954).
.The argument that the trial court erred in refusing to give an instruction on the non-tax-ability of personal injury awards was raised in
Cullinan v. Burlington Northern, Inc.,
. The Eighth Circuit has refused to decide the issue.
Raycraft v. Duluth, Missabe & Iron Range Ry. Co.,
. We suggest that on remand an instruction on the non-taxability of personal injury awards should take the following form:
“I charge you, as a matter of law, that any award made to the plaintiff in this case because of lost or diminished earnings, if any is made, is not income to the plaintiff within the meaning of the federal income tax law. Should you find that the plaintiff is entitled to an award of damages, then you are to follow the instructions already given to you by this Court in measuring those damages, and in no event should you either add to or subtract from that award on account of federal or state income taxes.”
The foregoing instruction is, with an amendment that we have italicized, the pertinent jury instruction required to be given in personal injury actions in the Third Circuit.
Domeracki v. Humble Oil & Refining Co.,
. Our present holding will apply in all cases in our Circuit wherein “the question is one of federal law or the applicable state law is silent.”
See McWeeney v. New York, N. H. & H. R. R. Co.,