Should We Tax Our Vets?

The IRS has created an excellent Web page — Tax Information for Members of the U.S. Armed Forces — which explains tax issues for those now on active duty. There are a huge number of rules, most of which greatly benefit those now fighting overseas.

But when you look at the forms, deductions, exceptions, alternatives, and deadlines you have to wonder: Why are we asking military people to pay taxes at all?

Conservatives often believe that taxes should be reduced because cash is the fuel which permits government expansion — cut tax revenues and you also cut the size of the government. As well, many conservatives believe that since the rich pay most of the taxes, they should benefit most from reductions, reductions which will fuel economic growth in general. Liberals routinely argue that tax cuts are fine as long as they are “revenue neutral” and benefit the poor and middle classes, the folks with the fewest economic choices.

If there is an itch to cut taxes and enjoy the wonders of growing deficits, why not please both conservatives and liberals and do something which actually makes sense: End the taxation of military incomes.

We don’t pay much to members of the military in terms of cash salaries and that’s absurd — leading officials at Freddie Mac, Fannie Mae, Enron, Wall Street “analysts,” and trial attorneys have been far-better compensated and look how much they have helped the country. It seems terribly short-sighted to believe that we can combine an all-volunteer military with a minimum wage and continue to attract an ongoing stream of qualified personnel to do the country’s important and dangerous work.

So why not make all military wages go further? Increase military pay now, today, by simply making it tax free. No forms, no deductions, no deadline, no accountants, no exceptions and no paperwork. The value of military salaries would automatically rise, making service more attractive. And for those who favor fewer dollars for government, a tax cut for service personnel in the armed forces would do just that.

Tax-free military incomes would make federal service more attractive and lift many military families out of poverty — a national disgrace. In terms of real estate, combine a tax-free income with VA mortgages and members of the military could afford bigger mortgages and better housing — results which benefit us all. And while we’re at it, let’s gut home sale regulations which unfairly tax members of the military stationed overseas for lengthy periods.

So write your nearby representative or senator and see what they have to say — it will be interesting to see who opposes an idea which is no more than a decent thing to do and in the country’s best interest.

Published originally by Realty Times on April 22, 2003 and posted with permission.

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