Wisconsin Senate Bill SB406

Wisconsin 2023-2024 Regular Session

• Introduced: 9/8/23
• Refer: 9/8/23
• Failed: 4/15/24

Caption

Exempting from taxation certain pension payments received by an individual for service in the U.S. Foreign Service. (FE)

Impact

If enacted, SB406 could materially alter the financial obligations of retired federal employees who served in the Foreign Service. By exempting these pensions from state taxation, the bill could make the state more attractive to these retirees and enhance their financial conditions. As a result, this could indirectly influence decisions related to residency among federal retirees, potentially benefiting local economies through increased discretionary spending by this demographic.

Summary

Senate Bill 406 seeks to amend state tax statutes to provide an exemption from taxation for retirement payments received from the U.S. Foreign Service. This legislation recognizes the pensions associated with service in the U.S. Foreign Service, thus aligning them with existing tax exemptions already granted to certain military and civil service pensions. The bill's framework is intended to ensure that these specific federal retirement benefits are not taxed, provided they are not already exempt under other stipulations of state law.

Contention

Notable points of contention surrounding SB406 mainly revolve around the implications of tax exemptions. Critics may argue that while this bill provides deserved relief to a specific group of federal employees, it could lead to disparities in how different pension systems are treated under state tax law. Some may express concerns over the long-term fiscal impact of additional tax exemptions on the state's budget, as well as the fairness of selectively exempting particular federal service pensions while similar benefits for other state or local service groups may not receive the same treatment.