Tax cuts on health savings accounts signed by walker

Now the contributions that are made towards the health savings accounts would become tax deductible as Gov. Scott Walker signed the first bill into a law on Monday, just barely 3 weeks after he took over office.

The bill was passed into a law by the bipartisan support in the Legislature on Thursday.  The Governor was surrounded by four Republican lawmakers from the state as he signed the measure at the EVCO Plastics, DeForest.

The new law is applicable to this tax year and the taxpayers will benefit from this in 2012.  This change will bring Wisconsin into line as per the Federal law along with 46 other states.

As per the reports by the Department of Revenue data, just about 1.3% of the Wisconsin taxpayers (around 35,300) took the tax deductions in 2008 on their health savings.  On an average the tax savings as per the new rules will roughly equate to $168 per person as per the nonpartisan Legislative Fiscal Bureau while the actual deductions averaged to around $2,600 per person.

Pretax contributions could be made to the spending account by the employees and workers and this could be used in future on the healthcare expenses.  The deductibles as per the private plans are around $1,200 for the individuals and around $2,400 for a family coverage.

However, there was opposition from the Democrats as they stated that these tax cuts would benefit just a few people but would do nothing to help in creation of jobs and this will also not be a significant amount to motivate the poor to open accounts.

This tax exemption would only help the wealthy and the elite but would fail to improve the overall quality of health care or create jobs in the state, stated Mike Tate, Chairman of Democratic Party, in a conference call.

The opponents also brought to notice the cost of the tax breaks which amounted to around $49 million by way of tax revenue spread over the next couple of years and stated that it would only deepen the $3 billion budget hole for two years, in Wisconsin.  Walker also stated that there would be some emergency action that would be required by the Legislature in order to balance the budget in 2011 and this would be outlined in his speech next week.  However, Walker seems to be defending the HAS tax cut as of now.