Originally Posted by
FL370esq
Probably not a true rumor. There is a famous (infamous?) tax case from 1929 (Old Colony Trust) that still holds true today. When a third party (Delta) pays a person's income tax on his behalf, the payment is income that is taxable to the employee.
Correct it is taxable income so if you would owe 20K for state tax they pay you 30k total to offset the increased federal tax.