Sen. Cassis sponsors bill to protect severance payments to laid-off auto
workers

“Times are tough. The last thing laid-off line workers need to worry about is how much of their severance payments the state is going to take in income taxes,” said Cassis, R-Novi. “My bill will allow these workers to use the severance to stay in Michigan, pay their mortgages and feed their families while training for future employment.”

Cassis said she is offering the deduction to former auto workers to offset the shock of being let go.

“A severance needs to be protected because it often represents the last wages an individual will earn,” Cassis said.

Senate Bill 632 would allow an automobile industry employee to deduct from their adjusted gross income up to $100,000 of severance payments. The tax-free severance payments would apply to employees of an automobile manufacturer in Michigan or a supplier or manufacturer of products used in the production, repair and maintenance of motor vehicles.

"We must do everything we can to support our Michigan auto workers and encourage them to stay in our state,” said Cassis, chair of the Senate Finance Committee. “This legislation is aimed at helping middle-class employees, like a line worker or an engineer.”

Cassis said the limit was designed to be large enough to cover an employee receiving 18-24 months pay in a severance package, but small enough to exclude departing executives and their million-dollar golden parachutes.

“The bill strikes a balance between doing what is morally right, and doing what is fiscally responsible,” Cassis said.

Cassis’ legislation is expected to be referred to the Senate Finance Committee for consideration.