Civilian employers of reserve and National Guard members who are mobilized longer than six months could be offered new tax breaks soon.
Senate Republicans, before adjourning for fall elections, yielded to threats from Sen. Mary Landrieu, D-La., to block a $137 billion corporate tax break bill if mobilized troops and their civilian bosses didn’t get to sip at the same tax-break trough.
An angry Landrieu told Military Update Oct. 15 that House Republican leaders, in closed-door deliberations with Senate colleagues, had tossed out her Senate-passed amendment to give reserve and Guard employers up to $2 billion in tax breaks to continue paying some wages to mobilized employees.
The idea was to entice more employers to make up any difference between temporary military compensation and pre-mobilization civilian pay.
“We thought that at the top of the list of people deserving help would be the Guard and reserve on the front lines taking the bullets,” she said. “But obviously we were wrong. Silly us.”
Landrieu said 41 percent of reserve component members deploying to Iraq and Afghanistan “take a pay cut.” Many employers “do the patriotic thing” and make up the difference “so if the guy was making $50,000 when he left the States, and he’s making $30,000 on the front line, some of them are sending them paychecks for $20,000 to keep his family whole.”
Senate leaders apparently took notice. They worked out a deal, attaching a modified Landrieu initiative to the House-passed Guardsmen and Reservists Financial Relief Act (HR 1779). Introduced by Rep. Bob Beauprez, R-Colo., the relief act would allow activated service members to make penalty-free withdrawals from Individual Retirement Accounts if mobilized six months or more.
Landrieu broadened Beauprez’s bill by providing small businesses with a 50 percent tax credit on any pay still provided to activated employees. Total tax credits per employee would be capped at $15,000 (or $30,000 in wages). Small businesses also would receive up to another $6,000 in tax credits per temporary employee hired to fill in for activated employees.
Landrieu made two big concessions, however, to lower the $2 billion cost. The employer tax credits would end in two years. Also, they would be made consistent with the retirement plan withdrawals, becoming available only when mobilizations last longer than six months.
With the Senate modifications, HR 1779 went back to the House for final passage. Republican leaders will have to decide during the post-election session whether to schedule a fresh House vote.
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