If they’d paid into their retirement funds, retirees would receive their pension tax-free until they’d reclaimed those contributions, usually for a period of 18 months to three years.
But under the proposed new law, feds would be taxed immediately on part of their pension — prorated, somewhat grimly, “on the estimated remaining life of the retiree.” Retirees would pay an estimated $10,000 in that time frame, although they were expected to pay the same amount in taxes over their lifetime.
In the column, diarist Mike Causey wrote that feds could actually breathe easy for a while longer: Congress had tabled any implementation of the change for six months because of concerns that a wave of feds would quickly retire to take advantage of the tax-free status.
And some also thought the extension might go on even longer, once Congress realized exactly what passing the tax change would do to their own, larger salaries.
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Previously in this series: 1930s: No more primping; 1940s: A post-War transition shakeup; 1950s: Pay raise proposals galore; 1960s: A focus on the Great Society; 1970s: Retiree COLA rises 50 percent; The Federal Diary’s inaugural 1932 column