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On A Proposal to Require the General Accounting Office to Complete a Study on the Tax Treatment of U.S. Military Personnel

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Floor Statement by Senator Mark Pryor

On A Proposal to Require the General Accounting Office to Complete a Study on the Tax Treatment of U.S. Military Personnel
March 27, 2003

Mr. President. I am pleased that this body is currently taking up S. 351, the Military Tax Bill. It is a much-needed and very well-deserved piece of legislation and I look forward to its passage in the coming hours.

Mr. President, we often talk about providing our military personnel with all of the resources they need to successfully complete their mission. When we have this discussion, we must recognize that our military personnel are unique, and we must make sure to carefully consider all aspects of their duty and our appreciation for them. In order to fulfill our responsibility, I believe we should seek a comprehensive picture of the financial condition of our military personnel and their families. By financial condition, I do not mean only their salary. Financial condition should include their salary, health care, housing, pension, education, disability, and all other employment benefits available to our troops.

In a hearing before the Senate Armed Services Committee, of which I am a member, testimony was provided suggesting that more military families should be empowered to take advantage of the Home Mortgage Deduction. This testimony got me thinking about military personnel who may not be able to take this important deduction and other important tax provision like it. After all, home ownership is not only a cornerstone of the American way of life and a source of pride, but it is a proven financial portfolio builder. It also got me thinking about how our servicemen and women and their families are treated under the entirety of our tax code, including administrative issues, since our tax code is certainly cumbersome and complicated.

My interest was peaked as I studied the military tax bill considered by the Senate Finance Committee, and I was eager to grasp a better understanding of the tax treatment of servicemen and women. What I found was a maze of tax code provisions that mainly consisted of short-term emergency solutions. What I did not find was any one source that provided a comprehensive view of the tax treatment of our armed forces or how these provisions take into account the needs of our military personnel and their families.

Mr. President, What I am proposing is simple and clear. I would request the General Accounting Office (GAO) in conjunction with the Departments of Defense and the Treasury completes a comprehensive study of the tax treatment of U.S. military personnel along with a complete study of the financial condition of our troops. I would also request any recommendations on whether the tax code could be used to improve the financial condition of our troops. This document would provide powerful information to the Administration, the Congress, and our men and women in uniform. It would gather in one document a complete listing of special tax codes that benefit military personnel. It would provide a picture of how military personnel utilize IRS provisions for their benefit. Mr. President, this study is a much needed analysis of the functionality of existing tax law and an important opportunity to acquire a comprehensive understanding of the tax code as it pertains to the unique needs of our troops.

We need to keep pace with the extraordinary changes that are taking place in the U.S. military and I believe the tax code is an extraordinary tool that can be used wisely to support key components of our evolving modern force.

Mr. President, I understand just how vital this pending legislation is to our men and women in uniform serving abroad. I commend both Senators Grassley and Baucus for their leadership on the Military Tax Bill and support them in their efforts to move this legislation forward in a timely manner. I will do nothing to hold up this bill's passage and therefore will not ask that the amendment I drafted on this matter be considered as part of the debate on S. 351.

Instead, I hope that Senator Grassley and Baucus will join me in this modest, but important, study by signing a letter that I plan to send to the General Accounting Office, requesting that they conduct the study on the tax treatment of U.S. military personnel and their financial condition immediately.

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