Renewed Effort to Extend War-Zone Tax Breaks to Civilians

Team Infidel

Forum Spin Doctor
Washington Post
April 24, 2007
Pg. D4
Federal Diary

By Stephen Barr
The idea of providing a tax break for federal employees who serve in combat zones is back on the table in Congress.
Two Virginia Republicans, continuing an effort that began last year, are sponsoring bills that would extend military tax exemptions to civilian government employees.
Rep. Frank R. Wolf and Sen. John W. Warner see the issue as one of tax parity and fairness because uniformed and civilian personnel often work side by side in Iraq and Afghanistan. The equity issue is complicated, however, because the government has set up different methods of compensating the two groups for duty in dangerous conditions.
Under current rules, enlisted military personnel and warrant officers in a combat zone have all pay and allowances excluded from their taxable income. The tax exclusion is capped for officers at $6,867.60 a month. Officers may receive additional, untaxed allowances.
Federal employees in combat zones are offered 70 percent in addition to their base salaries, in danger pay and post differentials, and also can earn overtime and other types of premium pay. Their salaries and additional payments are taxed.
Compensation models run by the Government Accountability Office last year found that civilian federal employees usually receive higher compensation than military personnel in combat zones. The scenario assumed that the personnel served in Iraq or Afghanistan for a year, were in reasonably comparable pay grades when based in Washington and were married with two children.
A comparison of a General Schedule 11 federal employee with a military O-3, such as an Army captain, showed that the GS-11 would have $136,276 in income after taxes and that the O-3 would have $89,970.
But federal employees serving in Iraq contend that such compensation comparisons mix apples and oranges. "It does not change the fact that we pay full federal income tax on our pay. One has nothing to do with the other," John Day, a logistics assistant representative, said.
Day, who has trained soldiers on weapons systems in Iraq and Afghanistan, said: "I'm making a lot of money, but I'm still getting taxed. We are all getting taxed, while the GI, who is working in the same motor pool, working on the same flight line, is not taxed."
Other civil service employees in Iraq said in e-mails that Congress needs to reexamine salary laws, which usually limit the income of the most experienced and highest-paid federal employees, preventing them from being compensated for all the hours they work in a combat zone. For most civil service employees in combat zones, pay, allowances and differentials cannot exceed $186,600 per year.
The government does not keep a tally of how many federal employees are serving in Iraq and Afghanistan. Wolf and Warner, in remarks introducing their bills last week, estimated that about 2,000 federal employees are serving in Iraq and Afghanistan. Other estimates have put the number at 3,000, including the 1,000 who work at the U.S. Embassy in Baghdad.
The relatively small numbers reflect concern that the government has not encouraged enough employees to volunteer for duty in the region. The Iraq Study Group last year recommended that agencies order civilian employees to fill key jobs in Iraq if not enough volunteers step forward.
Wolf and Warner said that providing tax exemptions to federal employees similar to those granted to the military would foster a sense of fairness that would be important in building cooperation across government.
"In Iraq and Afghanistan, the teamwork of the entire federal government is essential," Warner said. "We need to make it easier for our federal employees to participate."
Wolf said the Pentagon has talked of creating a "total force" of uniformed personnel and civilians. "What kind of message does it send to civilian employees if they receive disparate tax status from their military colleagues?" he said.