injury can arise from personal physical harm done to one person by another, such as kicking a person and breaking his or her leg. It can cost the injured person money. Let's say, 10K of hospital expenses.
Another way to harm a person is to accuse him or her of inappropriate behavior which is untrue-- libel or slander. The person winds up losing a job and it costs the person money. Let's say, for example, $10K to move from one locale to a different locale to find another job.
In each case, the out-of-pocket expenses by the injured party is $10K.
Now the SC proposes charging tax on any court-ordered monetary award categorized as defamation/slander?
In the second case, the injured party effectively pays taxes on an *expense*. The award it seems to me should be regarded as *compensation* for *expenses*, not "income."
It sounds overall as if the SC suffers from the impression that the purpose of society is income redistribution-- otherwise why exempt discrimination? Would there be any real doubt that so-called "reverse discrimination" would be effectively removed from this exemption, given the demonstrated bias of the court in this decision?
Likewise, the implicit purpose of taxing defamation seems to be, effectively, to exempt state and companies from any consequences of unintentionally or intentionally harming a person's reputation.
Injury is injury. Compensation is compensation, or should be. This is income redistribution and corporate pandering in the form of yet another wacked-out SC decision.
Maybe I misunderstand some aspect or another of the nature and effects of this decision(?)
Income is taxable unless specifically exempt.
Among the exemptions are damages paid for personal physical injuries & sickness. The treatment of deductions depends upon the associated income - business income, business deductions, vs personal income, personal deductions.
The essence of a defamation/slander suit presumably is to replace income lost by damage to one's reputation. If the income "lost" would have been taxable, why not its replacement? On the other hand, compensation for a lost body part (don't go there) is replacing one non-taxed asset (I mean it, don't go there) with another. It's all pretty logical, actually.