HB 59, HCA 1 -- INCOME TAX:  PENSION DEDUCTION

SPONSOR:  Boucher

COMMITTEE ACTION:  Voted "do pass" by the Committee on Ways and
Means by a vote of 14 to 0.

This bill authorizes an individual income tax deduction equal to
100% of the amount of any annuity, pension, or retirement
allowance received by a taxpayer 65 years of age or older,
regardless of the amount of the allowance or the income of the
retiree.  Under current law, federal, state, and local
government retirees may deduct up to $6,000 of pension
allowances received each year if their income is not in excess
of $32,000 for married or $25,000 for single taxpayers.  Private
retirees may deduct up to $5,000 each year with the same income
limitations.

The bill will become effective January 1, 2002.

HCA 1 -- Limits the amount of pension deduction for taxpayers
age 65 years of age or older to $15,000 per tax year.

FISCAL NOTE:  Estimated Net Loss to General Revenue Fund of
$47,273,190 in FY 2002, $196,728,535 in FY 2003, and
$204,844,076 in FY 2004.

PROPONENTS:  Supporters say that lucrative pension deductions
offered by other states are luring our middle to high income
pensioners to locate in those states and will cause Missouri to
lose the other tax revenues that are generated from this class
of pensioners.  Also, a number of state employees retired when
all state pension income was exempt from state taxation, which
has since been limited.  This could be considered a breech of
contract by the courts and could result in future lawsuits that
will require state pension income to be exempt.

Testifying for the bill were Representative Boucher; National
Association of Retired Persons; AFL-CIO; Jim Baker; Association
of Retired State Employees; Veteran's Organizations of Missouri;
Missouri National Education Association; Bill Shaw; Silver--
haired Legislature; Missouri-United Auto Workers; Missouri State
Trooper's Association; Missouri Retired Teacher's Association;
Missouri Carpenter's Association; United Steel Worker's of
America; Missouri Laborer's Association, AARP; and American
Legion of Dixon, Missouri.

OPPONENTS:  There was no opposition voiced to the committee.

Bill Tucker, Assistant Director of Research

Missouri House of Representatives
Last Updated November 26, 2001 at 11:42 am