"Right! This calls for immediate discussion!"
--The Committee, from Monty Python's Life of Brian.
Discussion isn't always a substitute for action. Which is why it was good news last week when legislators in Arkansas started discussing a proposal to eliminate the state income tax on the retirement pay veterans draw.
Yes, this state still taxes retirement and survivor pay for veterans and their families--at least most of it. Even if all the states that border Arkansas don't. Or at least not as much. Texas and Tennessee don't have income taxes at all--for anybody. Missouri is phasing out its tax on veterans' benefits. Other states exempt many of those benefits from their taxes.
Arkansas needs to catch up. To quote Don Berry, a retired Air Force colonel who has just testified to a legislative committee on the subject:
"We're talking about 38- to 44-year-olds predominantly. They retire from the Little Rock Air Force Base, and they're leaving town pretty much as soon as they can. If you're thinking about relocating, and there's a 7-percent income tax hit, the only reason you're stopping in Arkansas is family--or you have a flat tire. Basically with 21/2 hours and a half-tank of gas, you can give yourself a 7-percent pay raise overnight."
Just by leaving this high-tax state. Who can blame those vets?
So how much would it cost the state in revenue to eliminate income taxes for veterans? Last year, the state estimated it would cost Arkansas $17 million a year in tax revenue to exempt the first $40,000 in veterans' pay and benefits from this state's income taxes.
Okay, but how much would the state's economy benefit by attracting more people to Arkansas? Would more veterans living here--and working here, and thriving here, and paying other taxes here--cancel out that $17 million? Advocates of this tax reform say yes.
One lawmaker, Charlene Fite of Van Buren, says she'll introduce legislation early next year to exempt veterans' benefits from state income taxes. Our considered editorial opinion: This calls for immediate discussion. Then, if the proposal turns out to be as good as it sounds, pass it. The Legislature will be in session again early next year. That gives the state months to consider this good idea. And then to adopt it.
Editorial on 09/19/2014