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Saturday, February 7, 2009

Taxing Workers' Compensation Benefits to Finance the Bailout

As the greatest economic bailout goes forward, the Federal and State governments are exploring new areas to raise revenue, including from workers’ compensation benefits. The multi-billion dollar national workers’ compensation system, insured by recently nationalized unstable insurance carriers, maybe be a source to fund the rapidly increasing national debt.

The US national debt already amounts to almost $10 Trillion. The population of the US is 305.603, 863 and each citizen's share of the debt equals $35,091.43.

The economies of the Federal and State governments are crashing. California has now enacted furlough days to reduce its payroll. Delays in the delivery of workers’ compensation benefits will be compounded and insurance companies will be able to hold onto the benefits longer.

Benefit programs have increasingly become a source of revenue for the government. The Social Security Administration has enacted a user fee.

Other Federal programs charge for issuing opinions and rulings. The IRS has such a program for private rulings. CMS maybe required to impose a fee for the review and analysis of CMS MCSAA (Medicare Compensation Set Aside Agreements). The IRS already taxes punitive and non-economic awards.

As the demand for funding increases, Workers’ Compensation benefits may become a source of additional governmental revenue, especially in light of the need to monitor insurance funds and expedite the delivery of benefits. These new developments give added urgency to a complete review of the entire workers' compensation system.

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