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Posted On: Jan. 14, 1996 12:00 AM CST

CAN LOBBYING by employers on benefit issues make a difference?


One of the latest examples of how employer groups successfully influenced lawmakers in Washington is the recent enactment of legislation banning states from taxing pension benefits of former residents.

As we recently reported, about a dozen states have laws on the books that give them the authority to tax pension benefits of former residents, California being the most aggressive in enforcing its law (BI, Jan. 8).

Certainly, we understand the motivation of the states in seeking to tax pension benefits. Former residents are an easy target. They don't vote, for the most part, in their former states, and as a result, lack political clout.

Rather than exaggerate the issue, employer groups, as well as individual retirees sought relief from Congress with an argument as old as the nation itself: taxing former residents amounted to taxation without representation.

Employers and retirees, though, did more than raise the issue of basic fairness. As a practical matter, such laws-had they been allowed to multiply-also would have presented employers and retirees with some sticky administrative problems.

Consider, for example, an employee who during the course of a 30-year career with one employer worked and lived, because of frequent corporate transfers, in half a dozen states. Imagine the real-world problems for that retiree and his employer of apportioning a defined benefit pension for tax purposes among those states.

Fortunately, that is one problem that no longer will happen. Under legislation President Clinton signed last week, the only state that can tax a retiree's pension benefits is his or her current official state of residence.

That's only fair, as Congress agreed, in a rare display of overwhelming bipartisanship.

We can only hope that this unanimity on one benefit issue extends to others in the months ahead, such as simplifying the nation's overly complex pension laws and wiping out a 1993 law-a symbol of regulatory overkill-that requires every employer to remit to the federal government health care coverage enrollment information on every employee.