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Advocates plead to keep widow’s tax repeal in military policy measure

Posted on: 08/07/19

In a letter sent Tuesday signed by 64 Senate colleagues, Sens. Doug Jones, D-Ala., and Susan Collins, R-Maine, pushed the chairmen of the House and Senate Armed Services Committees to keep the "widow's tax" repeal in the massive defense policy bill during negotiations in coming weeks. (John Hughel/Oregon National Guard)

Advocates who pushed lawmakers to include a repeal of the military “widow’s tax” in the annual defense authorization bill earlier this year are now urging Senate leaders to keep it in the measure.

In a letter sent Tuesday signed by 64 Senate colleagues, Sens. Doug Jones, D-Ala., and Susan Collins, R-Maine, pushed the chairmen of the House and Senate Armed Services Committees to keep the repeal in the massive defense policy bill during negotiations in coming weeks. They called it an issue of fairness and justice for military families.

“As a result of the widow’s tax, tens of thousands of surviving spouses are prevented from collecting the full insurance benefits from the Department of Defense for which their military retiree spouses paid,” the letter states. “We have an obligation to make sure that we are taking care of our military families who have sacrificed so much. This problem goes back decades, but this year we can finally solve it once and for all.”

At issue is how the government treats two separate military survivor payouts. The first, the Dependency and Indemnity Compensation program, awards around $15,000 a year to survivors of veterans or troops who die of service-related causes. There is no cost to troops or families to enroll.

The other, the Survivor Benefit Plan, gives families of military retirees who enroll up to 55 percent of their loved ones' retirement pay after the veteran dies. The life insurance-type payouts are subsidized by DoD, but require enrollees to pay-in part of their retirement benefit to be eligible.

Individuals who qualify for either SBP money or DIC benefits receive full payouts from the respective programs. But family members who qualify for both are subject to an offset, where for every dollar paid out in DIC their payouts under SBP are reduced by one dollar.

Collins and Jones wrote in their letter that “this offset means that surviving spouses are denied more than $11,000 per year” in payouts.

In recent years, lawmakers have included partial fixes to the problem in the annual defense authorization act. But the House this year included in their draft of the budget policy measure a complete fix, albeit without a way to pay for the changes.

Congressional staff estimates the price tag for eliminating the widow’s tax would total $5.7 billion over 10 years. Jones tried unsuccessfully to add the issue to the Senate’s NDAA draft earlier this summer.

Staff from both armed services committees will spend much of the extended August legislative break negotiating the differences between the two chambers’ bills. Outside groups including the National Military Family Association, Veterans of Foreign Wars, Military Officers Association of America and Tragedy Assistance Program For Survivors plan to lobby those offices throughout the remainder of the summer.

“For the first time ever, ending the widow’s tax is included in the House NDAA,” said Ashlynne Haycock, Deputy Director for Policy and Legislation at the Tragedy Assistance Program For Survivors. The goal now is to make sure the issue “is not forgotten in the negotiation process.”

Lawmakers are scheduled to return to Capitol Hill on Sept. 9. Leadership has not officially named conference committee members yet, but officials from both chambers are hopeful they can reach an agreement on a consensus bill in the early fall.

By: Leo Shane III

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