dissenting, joined by BRIGHT, Circuit Judge.
I incorporate my concurrence in Hayden v. McDonald, 742 F.2.d 423, 441-42 (8th Cir.1984), and the reasoning set forth therein for urging that tax benefits of plaintiffs in a rescissionary damage action have no relationship to their present claim. The Department of Justice and the Securities and Exchange Commission have presented strong arguments against appellants’ theory in amici briefs.
The majority invokes the doctrine of law of the case. As Judge Learned Hand observed many years ago: “[I]t is now well settled that the ‘law of the case’ does not rigidly bind a court to its former decisions, but is only addressed to its good sense.” Higgins v. California Prune & Apricot Grower, Inc., 3 F.2d 896, 898 (2d Cir.1924). A court should never be constrained by the weight of a prior erroneous decision. The purpose of an en banc hearing is to draw on the wisdom of the full court and rectify earlier errors. Reliance on precedent is a poor substitute for analysis.
The damages provisions of the federal statute, section 12(2) of the Securities Act of 1933, 15 U.S.C. § 771 (2), and the Minnesota statute, Minn.Stat. § 80A.23(1), are quite similar:
§ 12(2): * * * recover the consideration paid for such security with interest thereon, less the amount of any income received thereon * * *.
§ 80A.23(1): * * * recover the consideration paid for the security together with interest at the legal rate, costs, and reasonable attorney’s fees, less the amount of any income received on the securities.
The key words are “less the amount of any income received * * *.” The majority concedes that the tax benefits received by plaintiffs are not really “income.” Nonetheless, the court holds the benefits must be subtracted — notwithstanding the clear language of the statute — in order to give meaning to “actual income.”
Loftsgaarden relies heavily on Salcer v. Envicon Equities Corp., 744 F.2d 935 (2d Cir.1984), cert. pending. The Salcer court was concerned the plaintiff might receive a windfall and, like the majority today, applied the tax benefits in favor of the defendant, transferring any possible windfall to the wrongdoer. The Ninth Circuit has held to the contrary, using the same reasoning I urge this court to adopt. Burgess v. Premier Corp., 727 F.2d 826, 837-38 (9th Cir.1984). The Burgess court found that “to simply subtract the tax benefits from damages would place an unfair burden on taxpayers generally. * * * Such a result leaves the government bearing the cost of defendants’ fraud.” Id. at 838. See also Western Federal Corp. v. Erickson, 739 F.2d 1439, 1444 (9th Cir.1984).
*963Application of tax benefits to lessen damages in a rescissionary suit actually fails to comprehend the principle behind a “tax shelter.” The investor receives no money from the tax benefit; the investor simply is allowed to deduct a certain amount from his ordinary income or apply a credit toward tax owed for the particular tax year. The actual value of the benefit depends on the income bracket the investor is in, which in turn depends on other deductions that may be available to the taxpayer that year. This fact alone demonstrates how speculative any benefit in tax savings may be. More significantly, the tax benefit is not a real or actual savings — it is usually only a deferral of tax. Ultimately, in a time of recapture when the investment is sold or otherwise disposed of, the taxpayer must return to the góvernment tax benefits gained unless the investor suffers an actual loss. The court’s conversion of the tax deferral to realized income by subtracting it from a plaintiff’s damages provides a windfall to the defendant — the fraudulent party. The holding in this case violates the old principle that “[i]t is more appropriate to give the defrauded party the benefit even of windfalls than to let the fraudulent party keep them.” Janigan v. Taylor, 344 F.2d 781, 786 (1st Cir.), cert. denied, 382 U.S. 879, 86 S.Ct. 163, 15 L.Ed.2d 120 (1965), quoted in Myzel v. Fields, 386 F.2d 718, 747 (8th Cir.1967), cert. denied, 390 U.S. 951, 88 S.Ct. 1043, 19 L.Ed.2d 1143 (1968).
In mitigation, the majority believes Loftsgaarden did not benefit from any of the consideration paid by plaintiffs. This is patently wrong. There was evidence at trial showing Loftsgaarden received over $100,000 profit from the investment scheme. Under the majority’s approach, Loftsgaarden gains both his own profit from the scheme and the advantage of plaintiffs’ speculative tax benefits. Such a result seriously undercuts the broad protective purpose of the Securities Act of 1933. See United States v. Naftalin, 441 U.S. 768, 774-777, 99 S.Ct. 2077, 2082-2083, 60 L.Ed.2d 624 (1979).
The majority adopts the magnanimous suggestion in Loftsgaarden’s brief that, in all fairness, plaintiffs’ ultimate damages should be doubled in order to offset the tax consequences of recovery — assuming plaintiffs are in the fifty percent bracket. This serves to demonstrate how speculative and inaccurate the consideration of tax consequences can be in a suit involving rescissionary damages. A defendant should not have to pay damages based on the plaintiff’s tax bracket in a given year. This is not a damage caused by the defendant. Their theory is that to make plaintiffs whole and restore the status quo ante we must account for the tax treatment of plaintiffs’ recovery. However, the relevant statutes clearly require the court to restore the consideration paid to the defrauding party, with interest, less any income actually received from the investment. And tax benefits concededly are not income received from the investment.1 Consideration of tax benefits involves the court in the problems of recapture and net gains or losses. In turn, the court finds it must consider each plaintiff’s income and deductions in the year of recovery to net out “actual damages” based on applicable tax rates. Rather than making up an artificial theory of damage by doubling the net gain, it is much simpler and more accurate to provide the plaintiff with restitution of his investment. The statutes provide a clear and simple formula. For example, Anderson invested $35,000 for a period of seven years. Loftsgaarden paid Anderson no interest or dividends and returned no principal. Anderson should recover $35,000 with interest for those seven years. Anderson will have to pay tax on the interest at ordinary income rates. In addition, he may be required to recapture past benefits. The tax transaction is between Anderson and the government and should not affect Loftsgaarden’s liability. By this method a *964plaintiff recovers exactly what he lost: the principal, and interest he would have earned had that principal been invested in a legitimate security.2 This procedure is far more simple than requiring trial courts to undertake complicated and speculative evidentiary hearings on the mechanics of tax deferral plans and plaintiffs’ tax status in given years of investment.
Today’s holding provides the wrongdoer a surety by which to avoid liability, allowing the fraudulent party to use the United States Treasury for security in any fraudulent transaction. To the extent a defendant can, by his wrongful act, create a tax loss for the innocent victim, the defendant will be allowed to escape liability, shifting the burden of the loss onto the government. I do not believe section 12(2) or section 80A.23(1) was designed to accomplish this result. Accordingly, I dissent.
. If depreciation deductions were actually “income,” then every taxpayer who takes such a deduction would have to include it as gross income on the next year’s tax return, rather than applying it to the property’s basis.
. It is reasonable to assume that if plaintiffs had not invested in Loftsgaarden’s fraudulent scheme, they would have invested in another legitimate project which would have returned similar tax benefits as well as principal and interest over the life of the investment. The majority’s approach will not make plaintiffs truly whole because the tax benefits are subtracted from the return of principal and interest.