Senator Pryor Introduces Tax Measure to Permanently Correct Combat Pay Inequity for Servicemen and Women
Senator Mark Pryor today introduced legislation to correct a discrepancy in the tax code that penalizes some servicemen and women serving in combat situations.
In 2003, Pryor and Senator Max Baucus (D-MT) along with Senate Finance Committee Chairman Chuck Grassley (R-IA) requested a General Accounting Office (GAO) study on military compensation and its tax treatment. The findings revealed that some lower-income earning military personnel receiving tax exclusions for serving in combat zones were forced to forfeit other tax advantages, including the Earned Income Tax Credit (EITC) and the additional Child Tax Credit.
To fix this glitch, Pryor has introduced the Tax Relief for Americans in Combat (TRAC) Act. The legislation allows soldiers to treat combat pay - which is not taxedas income for the purposes of the EITC. The EITC combat pay provision is set to expire in December 2007, but today's legislation seeks to make it permanent. The combat pay Child Tax Credit was made permanent in 2004.
"When it comes to tax relief, our soldiers do not deserve to be penalized," Pryor said. "Extending this legislation sends a clear message to our brave service members that while they are away fighting for us we will be here in the Senate fighting for them and their families."
Pryor said that the tax glitch affects as many as 10,000 lower-income soldiers serving in combat zones, who would be penalized by as much as $4,500 for officers and $3,200 for enlisted members.
"This is make-or-break money for our soldiers and their families," said Pryor. "If we allowed this tax benefit to expire we would have shortchanged the men and women serving heroically in combat who are not making much money, have families to provide for, and have little or no savings."