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Home of the South Carolina MOAA Council of Chapters

Legislative Affairs Network (LAN) Updates

Haley, military supporters seek end to military retiree tax

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MARCH 9, 2016 8:34 PM
Associated Press

Military boosters are trying to get South Carolina lawmakers to sharply reduce – and ultimately end – the state’s income tax on military retirement benefits.
For the first time, Gov. Nikki Haley inserted a one-year, $9.8 million tax cut in her 2016-2017 budget proposal. It’s the first cut in a proposed three-year-phase-in that would ultimately cost the state $33 million annually.
Although few want to criticize the idea in this military-friendly state, some wonder whether the state can afford such a hole in its spending plans.
The governor argues that many who have put in 20 years in uniform are still in their mid-40s or 50s and ready to start second careers.
“To get them to retire in South Carolina is a win for us,” said Haley, who often refers to herself as a military spouse. Her husband Michael serves in the South Carolina Army National Guard.
The retirees’ second incomes would be taxed normally, contributing to the state’s economy, Haley argues.
But a state tax expert with the nonprofit group Tax Analysts in Falls Church, Va., questions the proposal.
“It’s great politics, but it’s bad tax policy,” said David Brunori.
He said several states have cut military retirement taxes as a means to attract veterans, but he argues the proposal has more to do with garnering votes.
“It’s politically attractive to cut the tax burden of one segment of society that is a reliable voting bloc,” Brunori said. “But it means everyone else will have to pay more.”
The proposal passed the South Carolina House unanimously last year, but was stopped cold in the Senate, never leaving a subcommittee.
The issue comes as lawmakers continue their yearslong debate over fixing crumbling roads. The Senate is mulling a $400 million package that would get the pavement on almost all South Carolina interstates to good condition. It would fix less than half of the state’s primary roads and half of its deficient bridges.
William Bethea, head of the governor’s Military Base Task Force, said he hopes again this session to convince senators that the benefits of attracting military retirees will ultimately outpace the initial costs. The state will derive income from the retiree’s second jobs, their purchases of homes and cars, and potential income from retirees’ spouses and other family members, he said.
“I really think that it would take about 10 years, but over time, the positive impact will win out,” Bethea said.
A full state income exemption for military retirement is offered by 18 other states, according to the National Conference of State Legislatures. Partial exemptions are available in 16 states. That includes South Carolina, which currently exempts $3,000 in income for military retirees. It increases to $10,000 if a retiree is 65 or older.
Among other states offering partial tax exemptions are neighboring Georgia and North Carolina. Nearby Tennessee doesn’t have a state tax income at all, along with eight other states, according to the conference’s report. Seven states offer no exemption for military retirees.
Columbia businessman Bill Dukes, a senior adviser to acting Army Secretary Patrick Murphy, contends South Carolina needs to catch up.
“We’re not competitive. From a retired military person’s point of view, they know every state and what they offer and South Carolina doesn’t have it,” said Dukes.

Read more here:

Economic Anaysis of the Impact of Non Taxation of Military Retiree Pay on South Carolina

  1. Where We Are
    This week we have numerous updates that I would like to share with you. This and all updates will be posted on our council website. You are encouraged to go there as a one stop shopping source. Here is the primary Link on how to get started. Once at the primary page Select Legislative Affairs. Categories and sub areas will be summary listed for you to click on.
  2. Listen to the Audio Conference from Feb 22
    We had an audio conference on 22 Feb 2016. If you missed it, or would like to recap it, then go to on our State Council Website to get a complete recorded copy with handouts.
  3. Attend Meetings “Virtually” on the Web
    At our last audio conference, I went over the tremendous resource the State of South Carolina has provided to open up the legislative process by making it open to the public. This week at 14:00 on Thursday, 3 March the State and Local Veterans Issues Study Committee will convene to hear an update to HR 3147. You are encouraged to virtually come into the meeting REAL TIME by streaming the video or looking at it at a later date via the video archives. You may also attend the meeting in person if you are available. To attend the meeting virtually by watching the video stream, follow the instructions in item 5 below.
  4. Important Meeting March 3rd
    State and Local Veterans Issues Study Committee
    Blatt Building Room 426
    HR 3147 Update
    Mr. William Bethea will be our proponent
  5. How to Connect Online
    First, go the South Carolina Legislative Web Portal at:
    Click on the Image to the right to see what we are talking about. Note the agenda on the right side, go down to 3 March at 2:00 PM, then double click on live broadcast. If you miss it, you can always go back to the Video Archives link on the left side of the page and replay the meeting.
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  6. Our Letter Writing Campaign - Moving to Stage II
    We are approaching Stage II of the letter writing campaign. We have asked you to write to your Senators and Representatives with draft prototype letters. We have a new recommended PROTOTYPE, that can be downloaded below, that we would ask that you direct to the following Senators who sit on the Senate Finance Sub Committee on Sales and Income Tax.
    To illustrate what we are suggesting, click on the small images below to see what you would need to do when visiting each senator’s website. We have shown Senator Cromer’s website in this example.
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    Senator Ronnie W. Cromer (Chairman)
    PO Box 378
    Prosperity, SC 29127
    home --- 803-364-3950
    Senator Floyd Nicholson
    527 Bryte St
    Greenwood, SC 29649
    Senator Harvey S. Peeler, Jr
    PO Box 742
    Gaffney, SC 29342
    Senator Glenn G Reese
    507 Fagan Dr
    Lake Bowen
    Inman, SC 29349
    home--- 864-592-2984
    Senator Michael L. Fair
    PO Box 14632
    Greenville, SC 29610
  7. Military Retirement Income Tax Exemption Cost Analysis
    The case study data that will be presented to our Senators for consideration looks promising. Stay tuned for an update to the SC Military Task Force webpage for future postings in March 2016. The current version of the report along with other supporting materials can be seen here:
  8. Write an OpEd for Your Local Paper
    If You have the talent to write an Op-ed for your Local newspaper, we have some prototypes that have been written by others. Certainly it is always nice to have a previous example to work from. The images of the OP-Eds below are provided for ideas. They may be used as reference sources in writing your own.
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Thomas A. Robillard
Thomas A. Robillard
Col, USAF, Ret.
State MOAA Council VP for Legislative Affairs
(803) 730-6109
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