Recent Decisions Affecting Tax Neutralization in California: Clemens, Economy, and Barber
Barry Ben-Zion. 2021. Recent Decisions Affecting Tax Neutralization in California: Clemens, Economy, and Barber. Journal of Legal Economics 27(1): pp. 43–51.
This paper focuses on three recent cases concerning legal guidance in California for the application of tax neutralization in employment cases. The paper provides a brief discussion of the history of legislation, legal acceptance, and the forensic economic literature which arose to deal with the need to neutralize the adverse tax consequence of lump-sum awards in employment and other non-physical injury cases. It includes a simplified illustration of the calculations that would be required to achieve neutralization. It ends with a discussion of the specific cases that bring acceptance of the concept of tax neutralization to California (Clemens and Economy) as well as an exception that applies to state employees (Barber).