Posted on 11/07/2014 8:01:25 PM PST by Jet Jaguar
When it came time for Maj. Gen. Lawrence Wells, who had been stationed at Shaw Air Force Base in Sumter, to retire last year, he and his wife had to weigh two things.
Stay in South Carolina with their extensive community connections and well-established base of friends, or move to North Carolina to be nearer their three grown children.
When they listed the pros and cons, the two states came out even -- except for one thing. South Carolina was going to tax his $120,000 annual military retirement pay at $8,400 a year. North Carolina wasn't.
"That was the deciding factor," Wells said from his home in Fuquay-Varina, a suburb of Raleigh. "... My view was, after 35 years of service, multiple moves and lots of combat time, it would be nice to keep all my retirement pay. One state recognized that. The other didn't."
Wells is not alone.
South Carolina has dropped from eighth to ninth in states with the most military retirees. It was overtaken by Alabama, which hasn't taxed military retirement since 1989.
And the state could drop further.
With the military sharply downsizing after 13 years of war in Iraq and Afghanistan, a flood of new retirees will start their search for a place to live over the next two years. Southeastern neighbors North Carolina, Georgia, Alabama and Florida all offer better deals when it comes to the retirees' bottom line.
To counter that, the S.C. legislature is considering House Bill 3112, which would exempt military retirement from state income tax. It unanimously passed the House in the past session, but arrived too late to the Senate to come up for a vote.
It also carries a heavy price tag: The tax generates $22 million a year in revenue, according to the S.C. Board of Economic Advisors.
But advocates for the bill say those dollars and more can be recaptured as the state grows its retiree base. The revenue would be made up by additional sales taxes paid by the retirees and income taxes paid by merchants and service providers who profit from them. The retirees themselves would pay income tax if they take a second job, which many do.
"There are a lot of military people who through the years have been in and out of this area and have grown to love it and want to retire here," said Beaufort lawyer Jim Wegmann, who serves on a local military committee and the S.C. Military Base Task Force, which was appointed by Gov. Nikki Haley to protect and expand missions at the state's six major military installations.
"If you think about it, most military retirees that do 20 (years) and get out are about 38 to 45 years old, and I have lots of friends that go to work when they leave," he said. "If they're looking for that second career, and they're not going to get that military retirement taxed, it's a pretty big draw to look at those other states."
VETS MIGRATE TO MILITARY TOWNS
There are currently 57,755 military retirees in the Palmetto State, according to the U.S. Department of Defense. Retirees are different from other veterans because they served at least 20 years in the military and draw a pension.
About half live around the state's four military communities -- Columbia, Sumter, Charleston and Beaufort, according to a study by the S.C. Department of Commerce.
They migrate to military towns to take advantage of benefits like shopping in tax-exempt commissaries and base exchange stores, having access to veterans' services and being able to associate with other military people and institutions.
Those veterans near bases pump more than $442 million a year into the economies of those four communities, the study showed. But when the numbers are expanded to include all of the retirees in the state, the annual economic impact to South Carolina is more than $1.1 billion. And that figure likely is low, according to the study.
S.C. STRIVES TO KEEP VETS' SKILLS IN STATE
Keeping retirees' skills in the state is another reason to become more attractive to veterans, said William Bethea, a Beaufort County attorney who chairs the S.C. Military Base Task force.
"It's not just a money issue," he said. "It's a workforce issue. They have skills that they have developed over 20 to 30 years. And we need those kind of people to attract industry."
One of the biggest factors that an industry like Boeing or BMW considers when they are choosing to build a plant -- aside from free land, tax incentives, no unions and low regulation -- is a trained workforce. For Boeing and BMW, the state's wealth of military trained vehicle and aircraft mechanics boosted the state's chances.
With South Carolina being a small state -- less than 5 million people -- building a skilled labor pool should be a priority, Gov. Nikki Haley said. While the governor said she supports tax relief for veterans and retirees, she did not throw her support behind a specific bill.
Other states already are taking action to make themselves attractive to military retirees. For instance, Iowa -- a state of 3 million people -- eliminated its state income tax on military retirement pay this year.
State Sen. Tom Davis, R-Beaufort, has been a primary sponsor of several bills to support military personnel pushed by the state task force that have been passed by the General Assembly.
However, there's more to do, including the retirement pay exemption and providing in-state tuition rates for military personnel and dependents, he said.
"It is important to view exempting military-retirement pay from the state income tax not only from an economic impact perspective ... but also from a competitiveness point of view," Davis said.
'THE RIGHT THING TO DO'
In addition to the end of the wars and an expected wave of retirees, the military also is facing BRAC, which stands for base relocation and closing, a process used by Congress and the Pentagon to realign or eliminate missions, personnel and real estate to cut the budget and become more efficient.
With the military set to cut more than $500 billion over the next 10 years due to the Budget Control Act of 2011, commonly called the sequester, a new round of BRAC is expected in 2017.
One factor the military will consider when realigning its assets will be the support a community or a state offers military members -- called quality of life. The tax exemption is one of a number of state initiatives that will build a state's quality of life score when cuts are being considered.
South Carolina already has passed six key initiatives pushed by the Department of Defense -- from allowing veterans' courts to lower property tax assessments for deployed military personnel. But enacting the tax exemption and passing other initiatives, such as allowing in-state tuition for veterans without a one-year waiting period, would help build the state's case, advocates said.
Those two pieces of legislation -- the exemption and tuition bills -- will be the task force's "top priority" when the legislature convenes in January, Bethea said.
The task force plans to offer to lawmakers a "dynamic analysis" that would show the benefits -- from fiscal offsets, to workforce development, to BRAC, to patriotism -- that would offset the $22 million cost.
And lobbying will start early, he said.
"What we want to do is be able to show that this is not just a negative issue" from a revenue standpoint, he said. "We have to paint a fair picture of the economic result."
But from Maj. Gen. Wells' perspective, there are things that are more important than money.
"It's something I have worked at throughout my career, to make communities more supportive of the military," he said. "They are people who have put their lives on the line. It's the right thing to do."
Read more here: http://www.islandpacket.com/2014/11/06/3417649/base-supporters-call-on-sc-to.html?sp=/99/257/266/#storylink=cpy
Perhaps my attitude would be different if I had a pension.
Interesting.I'd bet that he was rewarded handsomely by Obola for his loyalty to the Rats.I wonder if he rose from MAJ to LTG over the last 6 years?
I will pose this question to everybody. Who wants to pick up the tab for Wesley Clark’s state taxes.
doc1019 does.
Do active military have to pay state income taxes when stationed in states that have them? Bases are not state property.
You pay taxes to your state of residence, not your domicile.
How about just being fair?
North Carolina was not taxing state retirement but was taxing federal retirement.
The federal retirees took NC to court and won.
http://www.dornc.com/taxes/individual/benefits.html
They pay taxes )or not) based on their home of record.
I don’t think any veteran will an honorable discharge should ever have to pay Federal Income taxes for the rest of his/her life. It should be a benefit of voluntary service.
Especially the confiscatory level that Americans are required to pay.
Aristocracy???? Are you even kidding me? Or are you just anti-military.
Why don’t YOU move back to DU?!
How about a tax code that taxes all income, including transfer payments, including pensions, including military pensions, the same.
I remember proposals over the years from many scattered places to exempt the pensions of policemen, firemen, teachers, etc. from taxation. The rationale given is that our public servants have made such an incredible financial sacrifice by taking a public salary all these years. While the reality is that public sector incomes outstrip private sector incomes by a wide margin.
I don't begrudge anyone what he has earned, but income is income and ought to all be treated the same when it comes to taxation. In a rational tax code, that would include fringe benefits, 100 percent of Social Security payments, all welfare benefits, etc. Broaden the base and lower the rate. We broaden the base by treating all income the same.
By a VAST majority the retirees are enlisted and make soooo much less than the example given. The media always does this. They choose a highly paid retiree and say “see??....this” while we’re left wondering what truck hit us.
Creating any aristocracy = $120,000 retirement pay
I think your math is way off by a few zeros or your definition of an aristocrat needs to be updated...
Don’t you wish FR had an edit button ?
Yes, yes and yes. It'll never happen because everyone thinks they are special and should get a break.
Do you believe that everybody should get treated the same or do you believe that individuals should get special consideration?
What were the Founding Fathers actions in regards to men who helped break away from England? Were they given special considerations when it was over or did they get to resume their life on their farmlands or other occupations?
Not all of the nobility in England have high incomes, but they still have titles.
I didn’t realize that, in some Freepers viewpoint, keeping to why America was founded was a socialist endeavour.
Thanks for informing me that, in your view, those of the DU are more faithful in keeping to the vision that was originally set out for this country.
One man, one law. No privileges.
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