Taxes and the present value assessment of economic losses in personal injury litigation: Comment

Anderson and Barber (2010) provide a recent discussion of tax effects on economic damages, for forensic economists and similar experts who supply the courts with opinions on economic damages. Anderson and Barbers’ paper notes that tax effects can be positive or negative, depending on the length of the earnings horizon, and they provide a formula for the “switch-point” in time when effects go from negative to positive. In this note I point out that their formula is generally incorrect, and I discuss conditions under which which it seems to hold approximately.