This will encourage people to not make a certain amount because then they'd be getting money from the federal government. I'm not sure how to fix this to make it work and not create an incentive to either hide income to work to not get a raise.
That argument can be applied to all means-tested welfare. Better get rid of medicaid/food stamps/public housing....
But this is a huge change. If you make $25,000 or less a year, you are
paid by the government, effectively raising your income. If you make more, you have to give 5.8%. If I was smart, I'd do everything I could to make sure I didn't make over $25k on paper a year.