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Tax break for military retirees barely passes Senate committee

Posted by   /  January 25, 2018  /  1 Comment

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By Howard Fischer | Capitol Media Services via Arizona Capitol Times

By the barest margin, a Senate panel voted Wednesday to give an additional break in state taxes to military retirees despite the potential loss of $15 million in revenues.

SB 1167, approved on a 4-3 bipartisan vote by the Finance Committee, would permit those who have served for at least 20 years to exempt $10,000 of their pensions from the state income tax. That quadruples the current $2,500 exemption.

About 55,000 of the state’s estimated 550,000 veterans would qualify.

Sen. Gail Griffin, R-Hereford, told colleagues they should not look at her proposal as a tax break but as a “workforce development bill.”

“Military retirees bring with them diverse skills, education and experience that Arizona desperately needs,” she said.

More to the point, Griffin said people can retire as young as 38, meaning they are ready for a second career. And she said that any income they get from their civilian jobs would be fully taxable, as would what their spouses earn.

Not everyone views the issue that way. Sen. Steve Farley, D-Tucson, worried that the state would end up with lower tax collections, money he said is needed for education and other state services.

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  • Published: 6 months ago on January 25, 2018
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  • Last Modified: January 25, 2018 @ 10:46 am
  • Filed Under: Government and Politics

1 Comment

  1. JEFFREY HILL says:

    I am afraid this bill will run afoul of Davis v. Michigan which caused AZ to pay out 4 years worth of refunds to military and federal civil service retirees back in the 1990s. The feds will not allow there to be discriminatory tax breaks between federal and state retirees as it was in AZ. AZ granted total tax free pensions for state retirees, $2500 for federal civil service and none for the military. That is why $2500 was decided for all government retirees as it was done in the states that got nailed then. I should know, I chaired Senate Finance in the 1980s when the issue first surfaced.

    Whether you can discriminate between federal retirees is a good question, but I think this bill is fraught with peril down the road.

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