Veteran presses for bigger tax break on pensions

Md. Senate panel to hear Kreiner, 80

February 02, 2010|By By Mary Gail Hare | The Baltimore Sun

After 30 years serving with the Navy in World War II, Korea and Vietnam, Edward T. Kreiner Sr. is spending his retirement years fighting for Maryland veterans.

The 80-year-old Bel Air man will testify in Annapolis today as the Senate Budget and Taxation Committee considers a proposal to double the state income tax exemption on military retirement pay to $10,000.

For nearly a decade, Kreiner and other veterans have pushed to exempt all military pension earnings from the state income tax - a step that he says would benefit nearly 50,000 Maryland residents. In making his case, he cites a 2003 state task force report that showed that such an exemption would be a boon to the state's economy.

"It's really a stimulus package that would help Maryland retain the current vets and attract more," he said.

BRAC, the military base realignment that officials say could add as many as 30,000 jobs to Maryland by the fall of next year, has increased demand for military retirees, who may offer experience and security clearances that are otherwise costly and time-consuming to obtain.

"Maryland has to be competitive for these employees," said Sen. Douglas J.J. Peters, a Prince George's County Democrat. "Military retirees will not move here, if it means paying more taxes."

Maryland already exempts the first $5,000 of military pension from the state income tax. Peters, who sponsored an unsuccessful exemption bill in the 2009 session, has now submitted a bill that would double the exemption beginning in 2012.

The state Task Force on Military Retirees found that veterans' households spend more than $2.5 billion each year on goods and services in the state, generating nearly $100 million in sales and real estate tax revenues. If Maryland continues to levy an income tax on their retirement pay, Kreiner said, it will lose the veterans to neighboring states that do not impose the tax.

Del. Sheila E. Hixson, whose House Ways and Means Committee will take up a similar bill Thursday, says the state can ill afford any cuts to revenue in the current economy.

"We do understand this issue and have worked with the veterans groups," the Montgomery County Democrat said. "But it is just too expensive for the state at a time when we are furloughing workers. This will not be at the top of the list this year."

Del. Joseph J. "Sonny" Minnick, who has long worked for the exemption, said BRAC has made the need for a tax exemption more immediate.

"These vets bring a wealth of knowledge, information and experience in addition to the security clearance many of these jobs require," the Dundalk Democrat said. "This can be a win-win for the state."

John Goheen, spokesman for the National Guard Association, said the exemption would be "a small but meaningful expression of gratitude to those who have served their country."

"These retirees have a set income every month and with a second job, that income can be disposable," Goheen said. "They will spend those dollars where they live and help regenerate the economy. Maryland should not just think of lost income but of all the aspects of the people the state might attract."

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