03.27.03

Senator Maria Cantwell’s Statement on theArmed Forces Tax Fairness Act

Ms. CANTWELL. Mr. President, I rise today in support of the Armed Forces Tax Fairness Act substitute offered by Senator Grassley. This legislation is a critical step towards full tax fairness for our military personnel and Foreign Service officers.

The American people and Congress stand with our men and women in uniform, and this is the right time to advance tax parity.

Last Congress, I was proud to cosponsor the Foreign and Armed Services Tax Fairness Act of 2002, which included many of the provisions that we are passing today. I was pleased to cosponsor the bill again this Congress when it was reintroduced.

This legislation will bring some common-sense changes to the way military and Foreign Service families are treated under the tax code. It will allow military and Foreign Service families to exclude up to half a million dollars in capital gains from home sales; make death gratuity benefits tax exempt; exclude compensation from the Homeowners Assistance Program; provide a deduction for the National Guard’s unreimbursed travel expenses; clarify that dependent care assistance for military families is exempt from taxation; and support education individual retirement accounts for students at service academies.

The legislation also extends these benefits to the families of the victims of the space shuttle Columbia tragedy. The Columbia provisions address many of the goals in the Assistance for Families of Space Shuttle Columbia Heroes Act, which I cosponsored with Senator Baucus.

Finally, I would like to emphasize a crucial provision addressing IRS treatment of terrorist organizations. Currently, when the United States designates an entity a terrorist organization, there is a long delay before the IRS revokes its tax-exempt status. There is no reason to postpone the action, but it takes time to update these lists. This bill will automatically suspend the tax-exempt status of designated terrorist organizations, expediting the consequences of the designation. Last Congress, Senators Grassley and Johnson introduced bills with this practical remedy, but we have yet to pass it into law. The House version of the Armed Forces Tax Fairness Act does not contain this language, but I will work with my colleagues in both bodies to ensure that when we send this bill to the President, this important provision is included.

Mr. President, the Armed Forces Tax Fairness Act supports our men and women in uniform during these trying times. I urge my colleagues to give it their full support.

Thank you, Mr. President. I yield the floor.