Pension tax would affect those collecting $100K or more

By Tim Sakahara - bio | email

HONOLULU (HawaiiNewsNow) - Taxing retiree pensions is being debated at the capitol.  The proposal would tax individuals making an adjusted gross income of $100,000 and joint filers making $200,000.  It's much more than the original proposal but those affected say it still hurts.

"If this bill becomes law I'll be harmed by it," said Ferne Fegley, Kailua resident.

That's why for the first time in Ferne Fegley's 86 year life she's come down to the capitol to speak up.

"I took the bus and walked over. Thank God I can still walk," laughed Fegley.

With the bill in hand she's ready to tell lawmakers that while a $100,000 pension may sound like a lot getting old is expensive and it doesn't go as far as you'd think.

"It makes me very uneasy because even though I have a good income after I deduct federal taxes, states taxes, hurricane insurance, regular insurance, my own insurance, auto insurance, lawn care, and all the costs of my life. This income doesn't look all that great," said Fegley.

"I'm very distressed about the possibility of this bill because as of January 1 I would be taxed on my pensions," testified Fegley, before the House Finance Committee.

Of course the state needs the money to fill its budget gap.  The pension tax would affect about 4,000 people and hope to raise $17.2 million.  When taken on average that's about $4,300 a year in extra taxes on those qualifying retirees.  Without it the state says the working people will pay more.

"Eventually if pensions are not taxed then eventually those that are taxed are going to pay at a higher rate," said Frederick Pablo, Department of Taxation Director.

"Pensions are not supposed to be a money grab," said Barbara Kim Stanton, AARP Hawaii State Director. "All their lives people have worked hard thinking when they get to retirement age, they will have enough and that's why we tell people they're not changing the rules midstream they're changing it when people have already crossed the stream."

So did Ferne Fegley's testimony help?  We'll see. The house finance committee is still debating at the capitol and it could go well into the night.

Copyright 2010 Hawaii News Now. All rights reserved.