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HSA tax break on its way to Walker’s desk

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Associated Press, Gazette staff
January 21, 2011
— The Republican-controlled Wisconsin state Senate has voted to eliminate state income taxes on contributions made to health savings accounts. Sen. Tim Cullen, D-Janesville, voted against the bill.

The Assembly followed suit and passed the same bill later Thursday.


It passed 21-12 in the Senate and 66-28 in the Assembly. Gov. Scott Walker has said he will sign it into law.


The measure would bring Wisconsin into line with federal law and make contributions to HSAs tax-free.


Eliminating the tax in Wisconsin would cost about $49 million over the next two years, deepening the state’s two-year $3 billion budget shortfall.


Cullen said the measure does nothing for people who are looking for jobs, which was the stated goal of the Legislature’s special session.


“HSAs are an appropriate choice for many people. The reason I oppose this bill is that there is no credible evidence that enacting this bill will encourage more people to use HSAs,” Cullen said in a news release. “If you haven’t already decided you want an HSA, and if you aren’t already satisfied with the federal tax breaks they provide, you are not going to open an HSA because of the state tax break.”


Cullen said he believes the unemployed would prefer the state use $49 million to help create jobs.


“We could add it to the pool of economic-development tax credits,” Cullen said. “If we are going to engage in deficit spending, let’s do it to help businesses start up and add jobs.”


Cullen represents the 15th Senate District, which includes Janesville and other parts of Rock County as well as the Whitewater area in Walworth County.


The tax break is one of new Walker’s priorities.


Two Democratic senators, Kathleen Vinehout of Alma and Jim Holperin of Conover, joined 19 Republicans to vote for the bill. The 12 remaining Democrats voted against it.



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