THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Friday, December 9, 1994 TAG: 9412090584
SECTION: LOCAL PAGE: B3 EDITION: NORTH CAROLINA
SOURCE: ASSOCIATED PRESS
DATELINE: RALEIGH LENGTH: Short : 45 lines
A U.S. Supreme Court decision this week has given retired federal workers in North Carolina new hope they will recoup more than $250 million in tax and interest held by the state.
State Sen. Beverly Perdue, D-Craven, told hundreds of senior citizens and their advocates at a statewide conference Wednesday that North Carolina should repay the money it collected by taxing federal retirees.
``We stole from our federal retirees when we took that money. We've got to give that money back,'' said Perdue, who has been an advocate for the elderly in the state legislature.
At stake are North Carolina income taxes paid on federal pensions from 1985 to 1988. Nearly 100,000 retired federal workers paid taxes that retired state and local government employees were not required to pay.
The Supreme Court ruled in 1989 that states cannot tax federal pensions if state and local workers' retirement pay is exempt. North Carolina is one of the few states among the 23 that imposed such a tax that has not agreed to reimburse the money.
In a case that may affect North Carolina's stand against refunds, the high court said Tuesday that Georgia was wrong in denying reimbursement. The court next week could agree to hear a similar lawsuit filed by a group of North Carolina federal retirees.
Even before Tuesday's ruling, Senate leader Marc Basnight, D-Dare, had signaled his willingness to seek a settlement.
``His position is, we owe them the money and we should pay,'' spokesman Bret Kinsella said. ``It's just figuring out how to do that.''
Any amount that goes to retirees will eat up money that could go to tax cuts. Republicans have already promised at least $200 million in individual income tax cuts next year. Others are pushing for business tax cuts.
Without spending cuts or unexpected economic growth, legislators will have about $170 million available for tax cuts or new programs, budget analysts estimate. by CNB