Sec. 1. 36 MRSA §5111, sub-§6 is enacted to read:

6.__Surcharge on congressional retirement benefits.__In addition to the tax established by this section as indexed for the taxable year, there is imposed a tax surcharge for a taxable year that begins in 2004 or later on the income of an individual who receives retirement benefits under the retirement plan for members of the Congress of the United States.__The surcharge is as follows:

A.__On the amount of the annual benefit received under the plan that is $12,000 or less, the surcharge is 10%;

B.__On the amount of the annual benefit received under the plan that is between $12,000 and $24,000, the surcharge is 33 1/3%; and

C.__On the amount of the annual benefit received under the plan that is $24,000 or more, the surcharge is 75%.

SUMMARY

This bill imposes a state income tax surcharge on the benefits of members of Congress received under the congressional retirement plan. The surcharge is applied in 3 stages to take a progressively larger portion of the affected benefits as those benefits increase. In this regard, the surcharge is similar to the 3-tiered reduction to Social Security benefits under the windfall elimination and offset provisions of Social Security law for retirees who receive benefits under both Social Security and another public pension plan.