State lawmakers field questions on Social Security tax exemption

House Speaker Rod Jetton told a crowd of seniors at the Cape Girardeau Senior Center on Wednesday that a bill he sponsored is going to give them a little extra cash each month.

Jetton, R-Marble Hill, was joined at the senior center by state Sens. Jason Crowell, R-Cape Girardeau, and Ryan McKenna, D-Jefferson City, state Reps. Ron Casey, D-Crystal City, and Steve Hodges, D-East Prairie, and leaders of advocacy groups who lobbied for the bill.

House Bill 444, passed by the legislature May 12, will reduce the tax on Social Security and state pensions by 20 percent in 2007 and an additional 15 percent each subsequent year until it is eliminated in 2012. To be eligible, seniors must be older than 62 with incomes of less than $85,000 per year if single and $100,000 for couples.

Jetton said the bill removed an unnecessary tax on seniors' benefits.

"It's time to give this money back to our seniors," Jetton said. "We're stopping the unfair tax by phasing it out over the next six years."

The state's $500 million surplus made it possible for the state to stop the tax, according to Jetton. Missouri was one of 15 states that taxed all Social Security benefits and public pensions for retired teachers, police, firefighters and military members.

In a question-and-answer session, audience members asked Jetton whether the pensions of railroad workers, all state employees and Teamsters would qualify for the exemption. Jetton said all public pensions of qualified seniors will not be taxed; however, the Teamsters pension will continue to be taxed because it is a private pension.

Some audience members said they felt it was unfair that people with incomes exceeding the cap would still be taxed.

Jetton said he wished the bill would have been passed as he intended it, with no cap and no phasing-in period.

"A bad tax is a bad tax, and I thought it should be removed completely," Jetton said. "But there's an old German saying: 'If you like sausages and laws, don't watch them being made.'"

Crowell discussed the compromises made in order to get the bill passed.

"The House passed the bill without a cap and without phasing the tax out," he said. "Passing it without either provision would have cost the state $287 million next year. The bill was going to get killed by senators talking it to death, because they thought that was too much money."

Crowell said 244,000 seniors will qualify for the tax break under the provisions, while only 25,000 of the most wealthy will be excluded.

Hodges said legislators in Jefferson City had an obligation to help seniors with financial problems.

"This bill was a no-brainer for me," Hodges told the seniors, "You deserve a great deal, and I don't think we can thank you enough."

pwylie@semissourian.com

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