FINAL BILL REPORT

SJM 8018

BYSenators Conner, Rasmussen and Saling

Requesting congress to pass legislation concerning taxation of pensions.

Senate Committee on Ways & Means

House Committe on Revenue

AS PASSED LEGISLATURE

BACKGROUND:

Many people who have retired to Washington from states with income taxes have discovered that they must pay income tax to their state of former residence on their retirement income.  Many times the retiree was unaware of any tax liability and is being assessed for back taxes.  Because improvements in computer technology have made it easier to find nonresident pensioners, many states, including California and Oregon, are now actively pursuing this source of income.

These income taxes are based upon a state's power to tax income that has its source within its borders, regardless of the state of residence of the recipient.

Under bills introduced in Congress recently, only the state of residence may tax pension income.

Because a state can constitutionally tax income that has its source within its borders, federal congressional action is the most effective means to deal with this problem.

SUMMARY:

The President and Congress are requested to support H.R. 1227, S. 434, or other legislation which permits the taxation of pension income only by the state of residency.

VOTES ON FINAL PASSAGE:

     Senate   46    0

     House 97  0