Butterfield Continues Fight to End Disabled Veterans’ Tax

Washington, DC – In advance of Memorial Day, Congressman G. K. Butterfield joined his House colleagues in a drive to force a vote on ending the Disabled Veterans’ Tax.

“It’s unfair and needs to be eliminated,” Butterfield said. “By doing so we would fulfill the promises our country made to our brave fighting men and women who have sacrificed so much.”

Butterfield explained that military retirees earn full retirement benefit for serving more than 20 years. When military retirees also have a service-connected disability, they are eligible for compensation benefits from the Department of Veterans Affairs (VA).  However, Butterfield said, military retirees who also have a service-connected disability are “taxed at the 100 percent rate,” meaning that for each dollar of VA service-connected compensation, they lose one dollar of their military retirement pay. 

“What’s worse is that other federal retirees who receive civilian benefits are allowed to keep both their retirement pay and their VA service-connected compensation,” Butterfield said. “This is no way to show respect for the sacrifices veterans have made.”

Currently, about 400,000 veterans are affected by the Disabled Veterans Tax.

Two years ago, Congress decided to eliminate the Disabled Veterans’ Tax over a nine-year period. Last year, Congress eliminated the phase-in and provided full concurrent receipt eligibility of military retirement pay and Veterans Administration disability compensation only for those retirees with a 100% disability rating from the VA starting on January 1, 2005.

And last week during committee debate on the Defense Authorization bill, Butterfield succeeded in speeding up the end of the Disabled Veterans’ Tax for about 29,000 retirees – those with 60- to 90-percent disability ratings who are unable to work as a result of their disability. 

“I’m pleased to have succeeded in speeding an end to this long-standing injustice, but the Disabled Veterans’ Tax is something that needs to be eliminated now,” Butterfield said.

Toward that end, Butterfield has signed onto a discharge petition that would force a House vote on eliminating the Disabled Veterans’ Tax immediately. Discharge petitions require signatures from 218 House members to force a vote.  So far, the petition has 113 signatures including those of North Carolina Congressmen Bob Etheridge, David Price, Brad Miller and Mike McIntyre.

Butterfield said that the expedited phase-in he added to the Defense Authorization will cost about $164 million and will be paid for by selling Cold War-era surplus defense stockpile materials no longer needed such as chromium and chromium alloys.  The change is expected to be approved by the full House today as part of approval of the Defense Appropriations bill.

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