Friday, August 25, 2006
There may be doubtful authority to declare an income tax provision unconstitutional on policy grounds as did the D.C. Circuit in Murphy v. United States, No. 03cv02414 (D.C. Cir. 8/22/06). However, there is a strong argument that in principle, for policy reasons, the damages in Murphy should not constitute income. My co-author and I, Laura Sager of NYU, fleshed out that argument in Discrimination Against Damages for Unlawful Discrimination, 35 Harv. J. Legis. 447 (1998). Thus, the Murphy court may have been wrong on the law, but I think they are right on the policy issue.
Stephen has graciously agreed to share with the broader tax community the relevant portions of the article here.