84
Opinion of the Court
an ordinary tort recovery with ADEA liquidated damages. We said that pain and suffering damages, medical expenses, and lost wages in an ordinary tort case are covered by the statute and hence excluded from income
"not simply because the taxpayer received a tort settlement, but rather because each element . . . satisfies the requirement . . . that the damages were received 'on account of personal injuries or sickness.' " Id., at 330.
In holding that ADEA liquidated damages are not covered, we said that they are not "designed to compensate ADEA victims," id., at 332, n. 5; instead, they are " 'punitive in nature,' " id., at 332, quoting Trans World Airlines, Inc. v. Thurston, 469 U. S. 111, 125 (1985).
Applying the same reasoning here would lead to the conclusion that the punitive damages are not covered because they are an element of damages not "designed to compensate . . . victims," Schleier, 515 U. S., at 332; rather they are " 'punitive in nature,' " ibid. Although we gave other reasons for our holding in Schleier as well, we explicitly labeled this reason an "independent" ground in support of our decision, id., at 334. We cannot accept petitioners' claim that it was simply a dictum.
We also find the Government's reading more faithful to the history of the statutory provision as well as the basic tax-related purpose that the history reveals. That history begins in approximately 1918. At that time, this Court had recently decided several cases based on the principle that a restoration of capital was not income; hence it fell outside the definition of "income" upon which the law imposed a tax. E. g., Doyle v. Mitchell Brothers Co., 247 U. S. 179, 187 (1918); Southern Pacific Co. v. Lowe, 247 U. S. 330, 335 (1918). The Attorney General then advised the Secretary of the Treasury that proceeds of an accident insurance policy should be treated as nontaxable because they primarily
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