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
Active Duty/Retiree ping.
Nobody likes to pay taxes.
Great way to thank Americas finest.
Sure, then as productive people leave the state because they don’t want to bear a heavier tax load, then what?
Creating any aristocracy, even retired military hero ones, was not why America was created.
Gee, there are so many ... so many that the citizens of SC will be overwhelmed and many will leave due to the overwhelming tax burden ... BS.
Giving our retired a tax exemption would not come even close to taxing the state of SC’s budget.
As for creating and aristocracy of retired military folks, I know it would not happen, but so what if it did. If it were not for these folks and their willingness to sacrifice their lives, we would not exists as a free nation.
So, you must be from Upper US.
I guess not all Freepers believe in why America was created in the first place, to eliminate the aristocracy.
They just want their own version of it.
Move back to Europe.
Most of the South Carolinians I know would be thrilled to carry the load for our nation’s military vets. This ain’t Massachusetts. These folks don’t tend to think of our vets as nonproductive, or useless eaters.
WOW! Are you for real? Sound like a troll to me.
OK, you win. Gumby.
Then I hope South Carolina gets every military vet and I hope it works out for the better. :)
AMEN!
Many have the silly notion that a law has to be passed before they can carry that load.
There is nothing to prevent them from paying the tax for the military guys already.
No need for further government intervention.
How much are you contributing to help the retired military for the 2014 tax year?
Wow, that is some kiss in the mail the general is receiving. I figure he has another 30 years to go and that means he will be getting $120,000 a year ($3.6 million for 30 years of retirement) on top of what ever he makes as a consultant from the defense industry. How many retired generals are there? I would guess there is a few thousand. At $120,000 per retiree, we are spending a little more than half a billion for retired generals each year, maybe more.
I think the thrill would be gone if they were living next door to the General’s $700.000 house, in SC, a mansion, with a pair of Mercedes in the driveway. I think the thrill would be gone with carrying the General’s load.
I already “contribute” enough in taxes to cover my share.
Are you former military?
To add, they might not like carrying his load, but they might like to carry the General’s golf bag a few times a week. I hear he tips well.
He is making some money.
It was well earned.
We have many medically retired E-4’s.
They can count on 2216 per month if they get 100%.
Taxes on that will kill you.
The only one named in the article was a retired general pulling a 6 figure pension. I also factored in that 75% of retired flag officers work as executives or consultants in the defense industry, where I presume they make salaries north of $250,000. It wasn’t someone getting $25k a year in disability, which wouldn’t be taxed anywhere who was complaining about paying his state taxes. It was a general whose income a least makes him upper middle class or higher. With a little help from Google, the General in question was all enthused about the promotion of the Air Forces first Lesbian General. He thought it was fantastic. That should go over real great in these parts. I agree, it was well earned, but so are his neighbors income well earned.
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