Babener Proposes Expanded S2 Tax Subsidy

Jeremy Babener, third year law student at NYU School of Law, and author of several recent articles about structured settlements, has proposed an expansion to the structured settlement tax subsidy in an article that will be featured in next week's edition of Tax Notes.

The premise of Babener's proposal is that high-income taxpayers benefit more from the structured settlement subsidy than low-income taxpayers, who sometimes do not benefit at all. Given that low-income taxpayers may be more likely to dissipate, Babener argues the IRC section 104(a)(2) exclusion should be available to all potential structured settlement recipients.

To accomplish this objective, Babener proposes a legislative conversion of the structured settlement exclusion to a refundable tax credit. According to Babener, a refundable tax credit would provide the same incentive value to all structured settlement recipients, whether high-income or low-income.

Following publication of Babener's Tax Notes article, S2KM will feature an interview with Babener about the context and rationale of his proposal.

For prior S2KM blog posts featuring Babener and his writing, see S2KM's structured settlement public policy wiki.