The Senate Finance Committee held hearings Wednesday on the effects of tax and fiscal policy on the military and veterans and how those could be alleviated through the Tax Code.
Committee chairman Max Baucus, D-Mont., noted that the Heroes Earnings Assistance and Tax Relief Act of 2008, also known as the HEART Act, eliminated many obstacles in the tax laws that created problems for veterans and service members.
Among other changes, we made permanent the law that combat duty income counts for EITC purposes, he said in his opening statement. We guaranteed that family members of fallen soldiers can take advantage of tax-favored accounts. And we provided disabled veterans with an extra year to claim tax refunds.
However, he believes that more can be done for veterans and members of the military. Today, we will hear how the Tax Code does not always make allowance for the unique circumstances that our troops and their families face during times of war, he added. Surviving children of our troops are sometimes subjected to higher tax rates on benefits paid to them. National Guard and Reserve Troops regularly pay out of their own pockets to drive hours to military training and do not receive reimbursement or a tax deduction for these expenses. Small businesses who hire guardsmen and reservists see their employees deployed again and again, but are not compensated for their loyal support for their employees. We need to address concerns like these, and more.
Ranking Republican member Charles Grassley, R-Iowa, agreed that it was necessary to explore policy options to alleviate the stresses and strains on service members and veterans as well as their families and support networks. To the extent requirements of the federal government, as contained in USERRA (Uniformed Services Employment and Reemployment Rights Act) and elsewhere, place burdens on employers of those deployed in the military, we should determine the most appropriate way to alleviate those burdens, he said. This committee should also consider the best way the unique burdens of the members of the military and veterans communities should be addressed by the tax laws. The committee may also wish to determine the best way those burdens are addressed by the tax law, or by some other way?
Marshall A. Hanson, a retired captain with the U.S. Naval Reserve and the legislative and naval services director of the Reserve Officers Association, recommended in his testimony that Congress should authorize tax credits for employers of reservists and employees and authorize tax incentives for employers who hire demobilized service members and spouses of active and reserve military. He also backed increasing the alternative minimum tax exemption for children who receive a Survivor Benefit Plan annuity, and improving the above-the-line deduction for overnight travel expenses of Guard and Reserve members. Other changes could involve authorizing pre-tax deductions for premiums paid on health insurance and long-term care.
Tim Embree, legislative associate with the Iraq and Afghanistan Veterans of America, said Senate should pass the New G.I. Bill before the October recess. The bill extends post-9/11 GI Bill benefits to veterans who enroll in apprenticeships, on-the-job training and vocational programs. He also said the Senate should pass the Veteran Employment Transition Act, which expands the Work Opportunity Tax Credit to incentivize businesses to hire Iraq and Afghanistan war veterans. Small business owners in the National Guard and Reserves should also get tax relief and additional access to capital and insurance.
"Finding a job is not just a concern for veterans who have recently separated from active duty. Employers are growing increasingly wary of hiring or reemploying National Guardsmen and Reservists, because of unprecedented mobilization rates, he noted Tens of thousands of Reservists, returning from combat, are not being promptly reemployed. When reemployed, they are not receiving the pay, pensions, health care coverage, and other benefits they are entitled to. More than 40 percent of Guardsmen and Reservists lose income when they are mobilized. Self-employed Reservists suffer a 55 percent loss in earnings when they are activated.