Ten House members have appealed to the Ways and Means Committee to reconsider a proposal in President Reagan's tax reform plan that would eliminate the tax-free, post-retirement period on pensions of federal, state and local government workers.
The committee okayed the provision Wednesday, but the final tax bill will be subject to a Senate-House conference.
Government employes contribute 7 percent of their salary toward their retirement program. When they retire their annuities are tax-free until they have recovered all the money they put into the program. That tax-free period usually lasts about 18 months.
Under the president's tax plan, those contributions would be subject to immediate taxation, and the amount the employe contributed would be spread actuarily based on the retiree's expected lifetime.
The legislators argue that such a proposal, scheduled to go into effect in January if the tax bill is approved, would work a hardship on employes and spur many of them to retire before the change goes into effect.
Protesting the change are Reps. Frank R. Wolf, Stan Parris, G. William Whitehurst and Herbert H. Bateman, all Republicans from Virginia; Maryland Democrats Michael D. Barnes and Steny H. Hoyer; Maryland Republicans Roy Dyson and Marjorie S. Holt, and Rep. Vic Fazio (D-Calif.).