Delegation works to end widow’s tax

By Mal Leary, Capitol News Service
Posted May 29, 2011, at 10:56 a.m.

 

AUGUSTA, Maine — Maine has one of the highest numbers of veterans in the nation, more than 138,000 in the latest estimate by the federal government. Members of the state’s congressional delegation say the surviving spouses of veterans are being unfairly treated by a federal policy they call the widow’s tax.

“It is absolutely inexplicable that we would place a tax on the surviving spouses of our fallen military men and women,” said Sen. Olympia Snowe, R-Maine. “This is totally wrong.”

The fundamental issue is a policy that says a military spouse whose husband or wife dies from a service-related cause can’t collect both survivor’s benefits and the full annuity benefits from insurance the couple bought from the Department of Defense at retirement. The policy reduces the annuity payment by the amount of the monthly survivor benefit.

“We have tried to address this in the past, and I have sponsored and co-sponsored bills to address this in past sessions and I am co-sponsoring a bill this session,“ said Snowe, who serves on the Senate Finance Committee that deals with tax matters.

Adding to a complicated policy is a provision that in order to fully collect on insurance their husband bought for them, the widow must marry again. An estimated 55,000 widows across the country are affected by the policy.

“This is one of those really sad stories,” said 1st District Rep. Chellie Pingree. “There is no logic in this. It hits someone at a vulnerable time, someone whose spouse has served their country and there is just no good logic for it and it is a terribly sad thing to do.”

Pingree serves on the House Armed Services Committee and is co-sponsoring a bill to address the problem. She said the measure has bipartisan support.

“People are realizing that we have to do more to take care of the people, and their families, that have done so much for our country,” she said. “I hope this is the year that we finally fix this.”

The issue has dragged on as committees in both the House and Senate have passed legislation to fix the policy, but it never has been finally approved. The full Senate has passed funding for fixing the problem but the money never has been appropriated when the bills got to the House-Senate conference committees. The cost is an estimated $6.7 billion over the next decade.

“Military families make incredible sacrifices that, too often, go unrecognized,” said Sen. Susan Collins, R-Maine. “Our legislation would help ensure that surviving spouses and dependents of our servicemen and women receive the full benefits that they are due.”

Collins is a member of the Senate Armed Services Committee. She is co-sponsoring legislation that would repeal the offset provisions, prohibit the Department of Defense from recovering payments previously made and require survivor’s payments to the dependent children if there is no surviving spouse. It is similar to the House measure.

“Our government should do everything it can to provide the respect and care our service members have earned, and this responsibility extends to their families,” said 2nd District Rep. Mike Michaud, D-Maine. “I am committed to making sure that recipients are getting the benefits they deserve and am deeply troubled by the current problem.”

Michaud serves on the House Veterans Affairs Committee. He is a co-sponsor of the House measure aimed at fixing the problem.

There have been measures to change the system, but in some cases they have made things worse. The federal government decided to help war widows by giving them back the premiums their spouses had paid for the policies they could not collect from. But, if the widow then remarries after the age of 57, she has to repay the premiums in order to collect survivor payments.

The widows point out that veterans paid 6.5 percent of their retirement pay to purchase the insurance, or about $100 a month, believing it would help the widows with the loss of their spouse.

Another “fix” that took effect in 2010 paid a taxable $50 a month to those widows affected by the offset, but with the average offset about $1,000 a month, it was viewed by many of the widows who testified before Congress as more of a nuisance than a help.

Even in the climate of budget cutting now in Congress, there is support to fix the widow’s tax.

“This is an obligation to those that have risked their lives for our country,“ Snowe said, “and many that gave the ultimate sacrifice of their lives to our nation.”

 

http://bangordailynews.com/2011/05/29/politics/delegation-works-to-end-widow%e2%80%99s-tax/ printed on September 19, 2014