GOP Considers Taxing ‘Fringe Benefits’ To Address Federal Deficit

 

In an effort to offset revenue losses from President Donald Trump’s tax cuts, House Republicans are reportedly considering taxing fringe benefits. Grant Thornton’s Washington National Tax Office tax principal Jeff Martin said, “If enacted, workers would likely have to pay income tax on the fair market value of the fringe benefits they are getting from their employer.” Martin noted, “Administering this would be very difficult if they were to go forward with it.”

The proposals, still in early stages, aim to address the $36 trillion federal deficit while expanding 2017 tax cuts and fulfilling campaign promises. Taxing fringe benefits would require employees to pay income tax on their fair market value, reducing their overall worth.

Employers may absorb the tax burden, eliminate benefits, or offer alternatives like financial planning services. Removing perks is expected to impact morale, especially as companies push for more in-office attendance.

Martin said, “If you start charging employees for parking when they’ve had free parking forever, that’s going to be a lot of unhappy employees.” Martin added, “If all of a sudden you’re being charged $250 a month for parking, that’s a huge difference.”

Return-to-office mandates from companies like Amazon and Goldman Sachs could clash with the changes, further discouraging employees from commuting. Taxing parking and transportation perks could complicate RTO efforts.

Cornell University professor Thomas Godwin said, “These issues are especially tricky given that many companies are pushing workers to come into the office more often.” Godwin added, “The RTO culture is starting to percolate and this is going to make it that much harder for employees to want to come back to the office.”