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Senator Doug Jones discusses potential repeal of "Widow's Tax" in Ozark

(WTVY News 4)
Published: Dec. 16, 2019 at 5:54 PM CST
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Congress is considering ending the so-called "Widows Tax" that has been adversely affecting military families for 40 years.

U.S. Senator Doug Jones stopped in Ozark to talk about a bill he is supporting to "axe the tax".

The easiest way to think of it is that it isn't really a tax per se, but more of an offset caused when mixing retirement and a death pension.

Despite paying for both, military widows can't receive both, but that's something Senator Doug Jones thinks will be changing very soon.

"It was not a hand out,” said a military widow at a press conference with Jones. “It was a bought policy paid for by my husband."

Several military spouses joined U.S. Senator Doug Jones to explain the issues they've had with military retirement and death pensions.

It's been a loop hole of sorts that's costing spouses of deceased veterans and active military members an average of $11,000 a year.

The issue is caused by an offset between two funds the federal government owes military families.

"One of those funds was paid for by these veterans,” said Jones. “Paid for by the military with their own money. The other is a statutory that congress authorizes, but when a veteran dies, they offset the two."

Here it is in layman's terms: on one hand, you have the military retirement plan, which spouses can receive up to 55% of even after their spouse dies. On the other hand, you have the death pension, which the spouse also receives, but, for every dollar they get in the death pension, one is deducted from retirement plan.

Congress has been trying to tackle this issue for 20 years, and while repealing the tax has received by-partisan support, the problem, as always, is funding.

Erasing the offset is expected to cost around $5.7 billion over the next decade.

"When it came down to the money, when it came down to the budget, they decided that their budgets were more important than the obligation and duty to these families," said Jones.

The bill affects 65,000 widows and widowers nationwide.

As for Alabama, the Wiregrass will have the largest impact from this in the state.

"He's going to rest a lot easier knowing that this burden is off my shoulders and that our family and all the other families feel respected now, so thank you,” said another widow.

Senator Jones does have a plan for handling the expense of the repeal.

The offset will phase-out over the next three years, with families getting one-third of the full pay-out, then two-thirds and finally the full amount in 2023.

The Military Surviving Spouses Equity Act has passed the U.S. House of Representatives already.

It will go for a final vote in the Senate tomorrow.