Team Infidel
Forum Spin Doctor
By Rick Maze - Staff writer
Posted : Tuesday Mar 20, 2007 13:11:28 EDT
A bill exempting all military pay and benefits from federal income taxes was introduced Monday in the House of Representatives.
“U.S. soldiers are fighting hard to protect our freedoms, and they should be protected from the long arm of the IRS,” said Rep. John Culberson, R-Texas, the chief sponsor of a bill that has four Republican cosponsors.
Culberson said the bill, HR 1559, which he is calling the Armed Forces Tax Relief Act, “will allow soldiers to concentrate on defending America, rather than worrying about paying their taxes.”
Culberson is not the first person to propose federal tax exclusions for all service members. Similar legislation has rarely received any serious attention in Congress, because the drop in federal tax revenues would have to be made up by increasing taxes on other Americans, or by cutting spending on federal entitlement programs, such as Medicare, Medicaid, Social Security and military and federal civilian retired pay — all unpopular choices for politicians, according to House aides working on military personnel issues. The aides asked not to be identified because they are not authorized to speak to reporters.
The measure was referred to the House Ways and Means Committee, where it is one of several military-related tax measures introduced since the new session of Congress started in January. It is, by far, the most ambitious because it would expand tax exclusions to everyone on active duty. Currently, such exclusions are limited to active-duty members only while serving in combat zones.
Under Culberson’s bill, National Guard and reserve members would still be taxed on their military pay while in a drilling status.
“We owe our military men and women an enormous debt of gratitude for keeping us safe and honorably serving our country. Exempting soldiers from income taxes is the least we can do to repay them for their service,” Culberson said.
Under his bill, all military compensation — including basic pay, special pays and bonuses — would not be counted as income for tax purposes for active-duty members. Military retired pay would still be taxable. The bill would apply to income received in calendar year 2007.
Several bills have been introduced since January that are aimed at helping mobilized Guard and reserve members and their employers by providing tax breaks for making up lost salary while mobilized, hiring temporary replacement workers and for lost production. Just last week, two bills were introduced to provide tax exemptions of up to $2,000 for military members and their families.
Both of those bills are sponsored by Rep. Christopher Carney, D-Pa., a Navy Reserve officer. One would allow a combat-zone tax break for the spouses of deployed service members. When a military member spends a cumulative 90 days in a combat zone, or is hospitalized for combat injuries, their spouses could receive a federal tax deduction of 2 percent of their adjusted gross income, up to a maximum of $2,000. The second bill would give all active-duty service members, and reservists on inactive duty training, the same exclusion, also capped at $2,000 a year.
Carney’s bills, like Culberson’s, are awaiting decisions by the House Ways and Means Committee, which is responsible for passing all tax-related legislation, about whether to package proposed legislation into a single military-related tax bill, or to consider the proposals as it passes a more general collection of tax changes.
A decision on how to proceed is unlikely before the House of Representatives approves an overall spending and revenue plan, which could happen within two weeks.