LANSING - In a possible first, individuals would pay state income tax on health benefits from their employers under one scenario lawmakers are considering to resolve the state's budget crisis.
Rep. George Cushingberry Jr., D-Detroit, said extending the income tax to benefits, as well as wages, would allow for a lower income tax rate increase as part of a final budget agreement.
Currently, benefits are not taxed as income.
Cushingberry said raising the income tax from 3.9% to 4.3%, and expanding it to include benefits, would generate about as much revenue as a 4.6% tax on income alone - roughly $1.2 billion in additional revenue. The state faces a $1.75 billion deficit for the new fiscal year that begins Oct. 1.
Republican leaders have been the main proponents of the idea of levying a tax on benefits as a possible solution to the budget crunch, according to Cushingberry, chairman of the House Appropriations Committee.
Interesting. Anyone with health care want to weigh in?