[Congressional Record Volume 142, Number 14 (Thursday, February 1, 1996)]
[Senate]
[Page S859]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         ADDITIONAL STATEMENTS

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      LIMITING STATE TAXATION OF CERTAIN PENSION INCOME--H.R. 394

 Mr. D'AMATO. Mr. President, I am pleased to support this bill 
and would like 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 
form 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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