What is the ‘Widow’s Tax’? How Surviving Military Families are Denied Full Benefits.

We’ve all heard that freedom isn’t free. But for over 65,000 military families, neither is death. Kristen Fenty, the wife of my husband’s first battalion commander, LTC Joseph Fenty, has been tirelessly advocating for years on behalf of other military spouses who are being denied their full survivor benefits because of the so-called ‘widow’s tax’.

LTC Joseph Fenty was killed in Afghanistan just 21 days short of being retirement eligible – he served nearly 20 years before giving the ultimate sacrifice for his country. Kristen and Joe’s only child, a daughter, was born one month prior to his death. I’ve written a lot about that deployment – it’s appalling to know that surviving military families are being denied benefits they rightfully earned. As Kristen said back in 2012, “It’s infuriating to think that something my husband earned is not going to his family. It demeans his service.

What is the military ‘widow’s tax’? The issue lies with how the government deals with two separate military survivor payouts – the Survivor Benefit Plan (SBP) and the Dependency and Indemnity Compensation (DIC) program. Under the current system, surviving family members (e.g. the ‘widows’) who receive both the SBP and DIC end up having their SBP reduced dollar for dollar for the amount they receive in DIC, regardless of how much the service member paid into the SPB during their career. An estimated 65,000 families are affected by this offset.

What is the Survivor Benefit Plan (SBP)? According to the Department of Defense, the SPB “allows a retiree to ensure, after death, a continuous lifetime annuity for their dependents. The annuity which is based on a percentage of retired pay is called SBP and is paid to an eligible beneficiary. It pays your eligible survivors an inflation-adjusted monthly income.” Simply put, the SBP is a form of insurance.

What is the Dependency and Indemnity Compensation (DIC) program? According to the Department of Veterans Affairs, the Dependency and Indemnity Compensation (DIC) program “is a tax free monetary benefit paid to eligible survivors of military service members who died in the line of duty or eligible survivors of Veterans whose death resulted from a service-related injury or disease.” It is commonly referred to within the military community as the ‘death benefit’.

Wait – so military families are encouraged to pay into an insurance program only to be legally prohibited from collecting it should the unthinkable happen? Yes. Current federal law requires survivors to forfeit part or all of their purchased SBP annuity if they also qualify for the DIC program. As a reminder, the DIC is for eligible survivors of military service members who died in the line of duty or whose death resulted from a service-related injury or disease.

Is this a recent development? Sadly, no. Advocates for the repeal of the ‘widow’s tax’ have been fighting Congress to fix the loophole for decades. The military’s “widows tax” does not discriminate against age, race, creed, or branch of service. It is simply a way for the government to squeeze more money from military families once their service member has either been killed in action or has died from a service-related injury or disease.

Kristen Fenty and her daughter on Capitol Hill in 2008

What is being done about it? Due to the tireless efforts of survivors and advocates for the elimination of the ‘widow’s tax’, legislation has been introduced in the past four Congress sessions (2011, 2013, 2015, 2017). Unfortunately, despite having significant sponsorship, it continuously failed to even receive a House vote.

It has never even made it to a vote? Seriously? What about in 2019? Currently there are two pieces of legislation with sponsorship – the Military Surviving Spouses Equity Act (H.R.553) in the House and the Military Widow’s Tax Elimination Act (S.622) in the Senate. Both proposed pieces of legislation have bipartisan support and would eliminate the provision.

So what happened on the hill yesterday? Senator Doug Jones (D, Alabama) stood on the Senate floor before the vote on the annual defense authorization measure in effort to add a repeal of the ‘widow’s tax’ (see video below). He called for unanimous consent to force a vote but Senate leaders wouldn’t allow it as an amendment in the National Defense Authorization Act (NDAA).  Senate Armed Services Committee Chairman, Jim Inhofe (R, Oklahoma), and one of the 74 co-sponsors blocked the parliamentary move over financial questions and other anonymous objections. The Congressional Budget Office has estimated the legislation would cost approximately $5.7 billion over the next decade. Senator Inhofe stated, “I support and will continue to support the permanent fix. It’s going to happen. We’re going to do it … but it can’t be on this bill.

What happens next? Despite advocates having fought to repeal the widow’s tax for years, this is the first time it has garnered this amount of attention in the general public. Senator Jones said yesterday that he has talked to House leaders in effort to bring up the bill in that chamber and that he will continue to fight on behalf of Gold Star families, whether it be as a standalone measure or as an amendment on an existing bill.

Kristen and her daughter in 2019

What can I do to help? Contact your representatives and urge them to support measures to end the ‘widow’s tax’. The Military Officers Association of America (MOAA) has a form that you can fill out to send a message through it’s Legislative Action Center. Use the hashtag #AxeWidowsTax when tweeting about the issue. Inform your family and friends about the issue. And don’t forget to say thank you to the members of Congress who have expressed their support.

Sources

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