Tyranny.
They’re taxing our souls.
Now, verdicts will have to “gross up” the award so that it will also cover the taxes that need to be paid, so the injured party can truly be made whole.
She should be able to go back to the employer and make them pay the taxes as consequential damages.
The is no law supporting compulsory income tax.
This should get interesting at the next round of tea party’s
I believe a compelling argument can be made that reputation and emotional stability are personal capital assets, and that damage to those assets are deductible capital losses under IRS regulations which would offset gains derived from court ordered monetary recovery for those damages.
Thus, if the IRS rules that recovered damages are income which should be taxed (which is specious and contrary to long established previous rulings), then common sense dictates that the offsetting deduction should be allowed, resulting in no increase in tax burden.
(I know, I know, since when has the IRS or other government entities ever applied common sense in rules, regulations, or governance.)