General Concept

Paying back government assistance where someone can afford would help allow more people to be helped by the government. People who have benefited from assistance who go on to make lots of money can afford to pay in back.

What Government Programs Apply

• Student Grants
• Medicaid/Medicare (as if they were insurance and only the part the government paid)
• SSI
• Welfare
• Cost of imprisonment for those imprisoned.
• Court Costs where guilt is found and the court costs are not recovered directly.
• Agricultural subsidies
• Educational benefits of GI Bill
• Court Ordered Payments for defrauding the government. (These could be significant.)
• Government costs associated with bankruptcy.
• IRS reductions of income tax owed.
• FEMA payments
• Naturalization costs
• State government assistance (as described below.)

How does the Tax Work

The IRS would kept track of government assistance to each person by SSN.

A two tier tax would be assessed against annual income. One tier compared against a value around 4 times the poverty income. The second tier would be lower but allow a non-refundable deduction of social security tax paid and have a rate equal to the social security rate.

For joint filers, repayment will apply equally to both parties, until one is fully repaid and then to the unpaid one.

State governments would have the option of reporting their assistance to taxpayers as well. These amounts would be keep separate, will only be repaid after all federal assistance has been repaid, and have a small fee between 0.1% and 1% assessed by the federal government with the rest collected divided proportionally to the states by amount of unassistance unrepaid.

General Comments

This should apply to all qualifying assistance recieved after approval of this tax. I would recommend starting on the 1st of January of some year.

I would have the tax build starting at 1% for each tier and climbing annually to the eventual rate.

With the elimination of the estate tax, I would permit the passing of the assistance unrepaid to the deceased's heirs with proportionally to the amount received, but limited to 10% of the amount recieved.

Other Comments

No interest should be assessed on the amount to be repaid.

It should be noted that this tax repays help for the poor, it only does so when they can afford to repay.

© 2007 by Thomas A. Stobie, SFO - permission to copy for personal use is granted.