[Congressional Record Volume 141, Number 206 (Thursday, December 21, 1995)]
[Senate]
[Page S19129]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         ADDITIONAL STATEMENTS

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                   PENSION INCOME TAXATION LIMITATION

 Mr. D'AMATO. Mr. President, I am pleased to support this bill 
and would like to submit this statement for the Record and to clarify 
that the language contained in the proposed legislation adds to the 
types of retirement income eligible for exemption. This language 
clearly intends to exempt from tax nonqualified deferred compensation 
that constitutes legitimate retirement income. Because it affects 
retirement income, only income from qualified retirement plans and 
nonqualified retirement plans that are paid out over at least 10 years, 
or from a mirror-type nonqualified plan after termination of 
employment, is exempt from State taxation.
  The language does not prohibit States from imposing an income tax on 
non-residents' regular wages or compensation. Cash bonuses or other 
compensation arrangements that defer the receipt of salary, bonuses, 
and other types of wage-related compensation that are not paid out over 
at least 10 years or from a mirror-type nonqualified retirement plan 
are not exempt from State taxation. One example would be if a salary is 
earned in a State by an individual, whether a resident or nonresident, 
but is voluntarily deferred for a few years until the individual exits 
the state, and then is paid over in a lump sum, even while the 
individual is still employed by the company, that kind of payment 
should not qualify for exemption from nonresident taxation of pensions. 
It is the intent of this bill to permit the States to continue to tax 
this income, while protecting from taxation those deferred payments 
that are for retirement income, paid from plans designed for that 
purpose.

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