Wis. Governor Unveils Plan to Make Health Premiums Tax-deductible

Wisconsin Gov. Jim Doyle unveiled a plan this week to exempt all health insurance premiums from state taxes, a break that he said would save families who qualify hundreds of dollars per year.

The governor said the plan would cost $50 million per year and would be included in his proposed budget next year if he wins re-election. The plan would need legislative approval.

Doyle said his plan would make all premiums paid by individuals and families who buy health insurance through their employers tax-deductible beginning in the tax year that begins Jan. 1, 2008.

“This is our effort to really make sure that we’re going to help people with some tax relief that helps them bring down the cost of their health insurance,” he said.

While many larger companies have programs in which their workers’ premiums already are not taxed, Doyle said his plan would extend the same break to 637,000 households whose employer-based coverage does not exempt premiums from taxes.

Many of those who qualify are insured by small businesses such as the Madison bicycle shop where the governor appeared, he said. He was traveling to Milwaukee to tout the plan later Wednesday while Lt. Gov. Barbara Lawton was making the pitch in La Crosse and Superior.

Doyle, a first-term Democrat, is making affordable health care a top issue in his run for re-election against Republican U.S. Representative Mark Green, from Green Bay.

The governor said the tax break would save $236 per year for a family that spends $300 per month on premiums. Doyle said he would propose cuts in other parts of the budget to pay for the break but he did not say where.

He said the state was in a position to offer tax relief, citing a report released Tuesday by his office showing expected revenue increases will more than cover an estimated $1.5 billion budget shortfall during the next two years.

The state Republican Party accused Doyle’s office of using accounting maneuvers to artificially improve the budget outlook. The GOP added that the Legislative Fiscal Bureau predicts a larger shortfall, closer to $2.6 billion.

Green’s campaign did not dispute the merits of Doyle’s plan but noted the governor has repeatedly vetoed bills passed by the Republican-controlled Legislature that would have made health savings accounts tax-free. Supporters tout those accounts as one solution to rising health care costs.

“He’s had four years of chances to make health care more affordable, but he did absolutely nothing,” Green said in a statement.

Doyle and other Democrats say health savings accounts favor the rich and do nothing for people who do not have money to save. Doyle said his plan unveiled Wednesday was “a health savings account for regular people” who are struggling to afford health insurance.

The plan builds on a bill the governor signed into law last year that makes premiums tax-free for families who pay the entire cost of their health insurance. He said that break will save money for 80,000 families.

“This proposal says we’re going to treat everybody the same,” Doyle said.