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Economic Testimony

Economic Testimony

Brien Roche

Frequently in an injury case or death case, economic testimony is necessary.  That testimony may come from a CPA.  It may come from an economist.

There are several ways to approach their calculations.  

Economic Testimony – Factors

The first issue may be what would the income stream have been without the injury.  As such the starting point is the plaintiff’s or decedent’s base income.  If the person was a government worker and working on a fixed salary with set grades or steps, then that is easy to determine.  If however the person had variable income, then you would need to go back to look at the history for several years.  The base then may be an average.

The second analysis is whether you factor in future promotions and raises.  

Future promotions and raises may be based upon what the vocational expert has to say in terms of the potential for job advancement and income growth.

The next issue is whether or not you delete for personal consumption.  In Virginia, based upon the case of Hoge Administrator v. Anderson, you do not.  Hoge was not a death case.  However the rationale has been applied to death cases.

Another factor to consider is taxes.  Again Hoge rejects the consideration of taxes.  As such in Virginia, taxability of the award is not factored in.

Death Cases

In a death case Virginia Code § 801-52(2) speaks of loss of income of the decedent.  It does not speak of loss of financial support to the survivors.  As such there is also an argument to be made that the Code section is to be strictly applied.  It does not provide for any deductions at all, therefore gross income becomes the measuring stick in Virginia.

All of this makes sense.  If you start deducting for taxability and personal consumption, then you are getting into some degree of guess work.  That is, what is the tax rate going to be 10 years from now.  What is the personal consumption going to be 10 years from now when perhaps the decedent’s children are college-age.  Will they go to private college or public college?  

Simply put, Hoge rejected any deductions based upon consumption or taxes.  

Present Values

There may also be an issue of whether or not you have to reduce any future award to present value.  At least in federal court, one federal court has ruled that the question of whether or not an award has to be reduced to present value is a federal question and not a Virginia question.  There are no 4th Circuit decisions requiring such reduction to present value for state claims.  In any event the burden would be on the defendant to present evidence reducing future losses to present value.  Aldridge v. Baltimore & Ohio Railroad, 789 Fed.2d 1061 (!986).  In CSX Transportation v. Casale, 247 Va 180, 186 (1994) the court declined to require reduction to present value in a FELA case.  

Call, or contact us for a free consult. Also for more info on economic testimony see the Wikipedia pages. Also see the post on this site dealing with expert issues.

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Economic Testimony

Economic Testimony

Brien Roche

Frequently in an injury case or death case, economic testimony is necessary.  That testimony may come from a CPA.  It may come from an economist.

There are several ways to approach their calculations.  

Economic Testimony – Factors

The first issue may be what would the income stream have been without the injury.  As such the starting point is the plaintiff’s or decedent’s base income.  If the person was a government worker and working on a fixed salary with set grades or steps, then that is easy to determine.  If however the person had variable income, then you would need to go back to look at the history for several years.  The base then may be an average.

The second analysis is whether you factor in future promotions and raises.  

Future promotions and raises may be based upon what the vocational expert has to say in terms of the potential for job advancement and income growth.

The next issue is whether or not you delete for personal consumption.  In Virginia, based upon the case of Hoge Administrator v. Anderson, you do not.  Hoge was not a death case.  However the rationale has been applied to death cases.

Another factor to consider is taxes.  Again Hoge rejects the consideration of taxes.  As such in Virginia, taxability of the award is not factored in.

Death Cases

In a death case Virginia Code § 801-52(2) speaks of loss of income of the decedent.  It does not speak of loss of financial support to the survivors.  As such there is also an argument to be made that the Code section is to be strictly applied.  It does not provide for any deductions at all, therefore gross income becomes the measuring stick in Virginia.

All of this makes sense.  If you start deducting for taxability and personal consumption, then you are getting into some degree of guess work.  That is, what is the tax rate going to be 10 years from now.  What is the personal consumption going to be 10 years from now when perhaps the decedent’s children are college-age.  Will they go to private college or public college?  

Simply put, Hoge rejected any deductions based upon consumption or taxes.  

Present Values

There may also be an issue of whether or not you have to reduce any future award to present value.  At least in federal court, one federal court has ruled that the question of whether or not an award has to be reduced to present value is a federal question and not a Virginia question.  There are no 4th Circuit decisions requiring such reduction to present value for state claims.  In any event the burden would be on the defendant to present evidence reducing future losses to present value.  Aldridge v. Baltimore & Ohio Railroad, 789 Fed.2d 1061 (!986).  In CSX Transportation v. Casale, 247 Va 180, 186 (1994) the court declined to require reduction to present value in a FELA case.  

Call, or contact us for a free consult. Also for more info on economic testimony see the Wikipedia pages. Also see the post on this site dealing with expert issues.
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