The only reason why the Congress enacted laws authorizing significant tax subsidies for structured settlement recipients was to encourage them (the Injured parties) to opt for a steady stream of financial income over time (i.e. a structured settlement periodic payments program), and not settle for a big chunk of change -i.e. a lump sum amount -up font.

Considering the above, once can not help but deduce that transfer of one's rights in structured settlements is not consistent with the original purpose for extending such tax subsidies to structured settlement agreements. There is no way to waffle around the above truth.

If one were to be simply guided by the original legislative intent that led to those tax subsidies, the subsequent transfer of the payment stream under a structured settlement arrangement simply subverts the very purpose of the structured settlement provision of the Code -which apparently was written for the sole purpose of promoting a relatively safer/conservative route of providing a steady, guaranteed stream of revenue for the injured.

In addition to the above, here are a few reasons why some people just don't like this whole concept of investors (individuals, Financial Institutions, and Life Insurance Companies, etc.) buying off such "distressed revenue streams" at deep discounts from injured individuals:

• Irresponsible Transfer of Structured Settlement Rights Can Cause Serious Health Care Issues for the Injured: Unless extreme caution has been exercised, it is possible that the Injured Party may prematurely exhaust the cash on hand, and be left with no resources to provide for any care that may be needed.
  
• Greater Burden For The Taxpayers at Large: Many individuals who opt for a lump sum settlement initially, or on a later date, wind up being supported through taxpayer programs such as Medicaid, or in their later years through Medicare. This results in transfer of the cost of such care to taxpayer funded programs -the cost that would have otherwise been paid for by the original periodic (structured settlement) payments agreement.
  
• Detremental Effects on Recipient's Quality of Life: If the lump sum amount so received gets exhausted prematurely, the Injured Party is most likely be faced with having to deal with financial crisis -something that they would have been spared had that individual not transferred away his rights to a structured settlement. There are greater chances that the injured person would have a better quality of life if his/her worries regarding ongoing cash-flow related issues were taken care of in the form of a guaranteed, steady, structured settlement revenue stream.
  
• The Injured Person Usually Gets Only a Deeply Discounted Amount: Considering that almost all such subsequent purchases of the payment stream under a structured settlement arrangement by so-called "discounting" or "factoring" companies often occurs at deep discount, the lump sum amounts that most Injured Persons receive are almost always significantly lower than the true value of a structured settlement revenue stream. Considering the fact that those companies are doing this for a profit, it should be no surprise to anyone that the recipient winds up with less than the true fair-market value of what would have otherwise been one of the most reliable, guaranteed, and steady revenue stream that one can possible get.

It is due to the above concerns that the legislators have tried to "discourage" such transactions by considering to impose an excise tax on all such transactions. Their rationale being: Those tax subsidies were created to promote types of transactions that better protect the injured. Considering that subsequent transfers are thought to subvert the original legislative intent, such practices that are being "addressed" by subjecting all such transaction to a significant excise tax.

Of course, those that support one's right to do whatever one wishes with one's financial assets (including the revenue streams being provided using a vehicle such as structured settlements) are quick to point out the following:

• Keep The Government Out of Victim's Personal Affairs: They believe that government has no business telling the injured persons (i.e. the victims) what is best for them, or how to best invest their money.
  
• Do Not Deprive the Victim of Investment Opportunities: Not allowing someone to maximize the returns on their financial resources is just plain wrong, outright undemocratic.
  
• Don't Over-Regulate Structured Settlements Trade: If this industry is allowed to grow, and if/when it becomes truly competitive, the Injured Party wins -because as the structured settlement "factoring" trade evolves into a competitive industry, the seller would receive the full fair-market value of his annuity.

The supporters of Structured Settlements "factoring" trade claim that those "apparently" deep discounts are nothing more than their opportunity cost of investment funds. They further claim that as this industry becomes truly competitive, those seemingly large discounts may shrink, making it increasingly more favorable to the seller.