Money, Military Retirement - Marine Corps Times

Retirees weigh in on California tax-break plan

My recent column discussing how different states treat military retirement pay for tax purposes and (to make California more tax-friendly for retirees) stirred up a lot of responses.

Retired Army Col. Warren Enos, president of the California Council of Chapters of the Military Officers Association of America, which represents 39,000 members and 45 MOAA chapters, is charging hard in support of that California legislation, Assembly Bill 1077.

The bill, sponsored by Assemblyman Joel Anderson, would eliminate California state income tax on military retired pay and military survivor annuities. It was scheduled for a hearing and a vote May 11, but action was postponed until a date to be determined, according to Ryan Clumpner, an aide to Anderson.

The delay is not necessarily a setback. In fact, I consider it good news: It will provide time for the California Assembly to gather all the facts before the vote.

And it’s an important window of opportunity for retirees to contact their state representatives. Politicians work for us; we can’t be hesitant to provide input on issues that affect us.

A lot of retirees are already on board. Retired Navy Capt. Ivan Dunn of San Diego told me he’s been contacting everyone he can think of to spread the word, including The San Diego Union-Tribune.

And it’s not just retirees in California following this issue. Retired Air Force Chief Master Sgt. Jerry Gething, a 30-year retiree living in Maryland, noted that the state began exempting the first $5,000 in retirement pay from state tax in 2006.

“However, I strongly believe they can eliminate [the tax on retirement pay] completely,” he said. “To see that AB 1077 is a similar initiative in California is heartwarming.”

Gething is wrapping up his master’s degree with a thesis on the issue of eliminating all state taxation of military retirement pay in Maryland, and he said he plans to take up the issue with his own state representatives.

Retired Air Force Brig. Gen. Paul Cohen is backing the cause in Nebraska.

“We’ve been working this here for five years and have presented it in much the same way, as an economic development issue,” he wrote. “It’s an uphill battle, particularly in times of financial strain, but it’s worth it.”

Of course, states looking at this issue invariably will focus first on lost revenue from exempting retired pay from taxation. But the smart states will think about the benefits of attracting the trained, able, experienced work force that retirees represent.

In the meantime, as soon as we see movement on the California initiative, I’ll let you know.