Politics

Democrats Stall Bill For Gold Star Family Tax Relief

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Amber Athey Podcast Columnist
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Gold Star families will have to wait a bit longer for tax relief after House Democrats attached the issue to a larger retirement package.

The Senate passed S.1370, the Gold Star Family Tax Relief Act, on May 21 through unanimous consent. The bill, which was sponsored by Republican Louisiana Sen. Bill Cassidy, eliminates a provision in the Tax Cuts and Jobs Act (TCJA) that applies a higher tax rate on survivor benefits given to children of deceased military members.

Some military widows opt to sign their survivor benefits over to their children in order to avoid what they call the “widow’s tax,” a government-mandated offset that prevents them from receiving full benefits from both Department of Defense (DOD) and Veterans Affairs (VA) programs. (RELATED: Gold Star Wives Lobby Congress For Full Survivor Benefits)

However, the TCJA’s so-called “Kiddie Tax” meant the benefits to the child could end up being taxed at a rate as high as 37%. The Gold Star Family Tax Relief Act ensures that the survivor benefits are instead taxed as normal earned income.

A similar measure was introduced in the House by Democratic Virginia Rep. Elaine Luria with 155 cosponsors, an almost sure bet to pass. But instead of holding a vote on the straight-up relief bill, Democrats opted to tie it to a sweeping and more contentious retirement bill, the SECURE Act.

“The Senate is going to take its time [on the SECURE Act] because it’s a wide-spanning bill,” a senior GOP aide told The Daily Caller. “Meanwhile, the House is refusing to move the standalone Gold Star family bill.” 

The SECURE Act, which makes several changes to retirement plans in an attempt to incentivize more Americans to save, passed 417-3 in the House. The bill has stalled in the Senate, however, due to the last-minute removal of an expansion on 529 plans to allow them to pay for homeschooling expenses.

The removal meant some Republicans were no longer eager to support the bill, including Republican Texas Sen. Ted Cruz, who objected to a unanimous consent vote. In the meantime, Gold Star families don’t get tax relief.

Now Democrats are running ads hammering Republicans for not helping Gold Star families,” the senior GOP aide said, urging Democrats to make a move on the non-contentious standalone bill. “There are some things that should be above politics and helping the children of dead soldiers should be one of them.” 

Republican Pennsylvania Sen. Pat Toomey echoed a similar sentiment in a statement to the Caller:

“The fastest way for Gold Star children and families to receive tax relief is for the House to pass the standalone Gold Star Family Tax Relief Act. This measure, which the Senate unanimously approved, would be on the president’s desk as soon as the House passes it. Instead, Speaker Pelosi and House Democrats are refusing to call the bill up and are now using tax relief for Gold Star families as a political football to force the Senate to accept a bevy of unrelated changes to the tax code, several of which are controversial. This is not a matter for partisan politics. If House Democrats truly want to fix the tax treatment of survivor benefits, they will call up and pass the Gold Star Family Tax Relief Act immediately.”

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