Search This Blog

Wednesday, May 21, 2008

Tax Relief, the HEART Act, Education and Pay Raises...

Is tax relief on the horizon for military families and veterans? What other big changes may be coming our way?

Earlier this week, "the House passed $1.3 billion in tax relief for military families facing significant financial hardships due to extended deployments. The bill represents a robust effort to reduce the tax burden on military families -- including helping more military families to access the Earned Income Tax Credit, offering small businesses a tax incentive to pay their National Guard and Reserve employees called up for active duty, making thousands of veterans eligible for low-interest home loans and ensuring that more military families are able to receive Recovery Rebates" (Office of the Speaker of the House, May 20, 2008).

So, what is the HEART Act?

Heroes Earnings Assistance and Relief Tax Act of 2008

To read what was originally introduced to the House: H.R.6081

Some key aspects (there are others not listed here) that are addressed you may be interested in are:
  • Information on Recovery Rebate for Military Families;

  • A piece concerning combat pay being possibly included as earned income in regards to the earned income tax credit;

  • Mortgage revenue bond changes for vets;

  • Survivor and Disability Payments;

  • Wages and differential military pay;

  • Retirement plan distributions for persons called to AD;

  • Roth IRA and Educational savings contributions from military death gratuities;

  • Employer wage credit for those employees called to AD;

  • Qualified military benefits and how they relate to state payments to miltary personnel...
and much more.

It was updated as "Engrossed as Agreed to or Passed by House" and that can be read here: )[H.R.6081.EH]

Did I read that there may be changes in education benefits?

Apparently, there is a 21st Century GI Education bill in the works. This might immediately sound appealing to the troops and soon-to-be veterans, but is it a good idea?

According to IDS Staff Editorial, Indiana Daily Student (May 18, 2008) that I read on CBS, "There are several major differences between the new bill and the WWII GI Bill that are crucial to the success of and impact on military operations. Most importantly, the original bill was passed after the war was over and troops had returned home. It was intended to deal with an onslaught of young men in the labor force and keep the economy afloat in order to circumvent another 1930s-style economic decline. Finally, it was meant to reward those who had lost economic opportunities while serving, many due to conscription. By ignoring these specificities, the new bill will not have the same positive impact." Okay, that all makes sense and most of us knew that, but what does this have to do with the 21st Century GI Bill?

IDS (2008) went on to explain that, "While almost everyone agrees that we as Americans are forever indebted to our veterans and that they are certainly deserving of generous benefits, a bill that does this at the cost of bringing our military to its knees is simply not worthwhile. Regardless of opinion on our country's current military engagements, bleeding the armed forces to death in the name of veteran benefits is not the way to solve the debate."

IDS (2008) alleges that critics have said the bill fails in that it puts a significant strain on the Armed Forces. Critics are said to assume that "those who have served their 36 months might take off to pursue their degree. While recruiting would be improved because of the benefits, retention would likely plummet, and the cost of training new recruits would be significant. Some even suspect that this bill is an underhanded attempt to end the war in Iraq by overextending the military's budget to the point where it cannot continue to fight overseas. Webb failed to deny this consequence, simply stating that the bill will help soldiers transition to civilian life and benefit those who do not wish to make a career in the military. While individual soldiers would benefit, Americas armed forces would ultimately be impaired" (IDS, 2008).

I did see talk in other places as well that improving the GI Bill might adversely affect retention rates. In particular, Rick Maze of the Army Times wrote an article on this very subject earlier this month: CBO: Better GI Bill would cut retention 16% (Maze, May 8, 2008).

Pay Raise?

You may have already seen talk about a pay raise expected for next year. I know I have. People get excited, but with this year's pay raise debacle, I wouldn't be getting your hopes up. That's not to say that a pay raise won't be proposed and approved. Rather, it goes back to what your mom might have told you about waiting until your chickens hatch. ;)

So, there seems to be a lot going in D.C. these days in terms of service members, their families and veterans. Keep your eyes open. It's going to be an interesting year.

No comments: