Commentary: Why Can’t Retirement Fund Surplus Cover Widows Tax Repeal

Commentary: Why Can’t Retirement Fund Surplus Cover Widows Tax Repeal
Retired Air Force Col. Dan Merry, MOAA's Vice President of Government Relations, pictured (far right) during a dignified transfer ceremony at New Castle Air National Guard Base, Delaware, in 2015. (Photo by Roland Balik, USAF)

[UPDATE From MOAA: On Wednesday, the Senate voted 94-0 to recommend the final version of the NDAA includes language repealing the widows tax. Click here to read the latest.]

As officers, many of us experienced the costs of war, some of us up close and personal. As the commander of the Port Mortuary at Delaware’s Dover Air Force Base, I witnessed the heavy price paid by the families of fallen servicemembers. My role at Dover was to ensure dignity, honor, and respect for the fallen and to provide care, service, and support to the families.

Part of that role included leading dignitaries in receiving the fallen, flown in from conflicts around the globe. In the still and the quiet of the transfer I could clearly hear the spouses and family members wail as flag-draped cases were carried off the aircraft. As gut-wrenching as the experience was, this dignified tour remains the most memorable experience of my 34-year career in uniform.

We remain a nation at war. To date, every active duty Special Forces Group lost at least one Green Beret this year.

Soon after the funerals, the spouses of the fallen, having already lost so much, learn they will lose even more. The benefits in place to support these spouses and families are reduced by what is known as the widows tax.

Sen. Doug Jones (D-Ala.) estimates 67,000 surviving military spouses are affected by the widows tax. Military survivors sacrifice all or part of their Survivor Benefit Plan (SBP) annuity from the Department of Defense. MOAA estimates surviving spouses currently lose up to $12,000 annually to offset a separate compensation known as Dependency and Indemnity Compensation (DIC), paid by the Department of Veterans Affairs.

The widows tax is an injustice our government has failed to correct for over 40 years. Millions of Americans would agree we must right this wrong. Despite overwhelming support from Congress – this year, 85% of lawmakers agreed to cosponsor standalone legislation to end the widows tax – they continue to trip themselves up over how to pay for a fix.

Congress has the authority to remove this tripping hazard – the righting of a wrong should not be hindered by a pay-for. SBP and DIC are existing benefits that have been erroneously labeled as double dipping. But Congress has agreed, these are two different pays from two distinct departments for two different reasons: 1) an annuity to compensate years served, and 2) compensation for the service-caused death.

I am, however, puzzled by the apparent lack of funds in the first place. The narrative on Capitol Hill centers on lawmakers’ inability to find money to pay for the fix. But the Office of Management and Budget, in its analysis of the FY 2019 Budget, identified what seems like a viable source of funding. In its FY 2019 budget report, the agency states, “During 2017-2019, the Military Retirement Fund has a large surplus and is estimated to invest a total of $218 billion, 48% of total net investment by Government accounts.” [FY 2019, An American Budget – Analytical Perspectives, Office of Management and Budget; page 38]

Despite these obstacles, we all can do something to help. The FY 2020 National Defense Authorization Act includes a provision to repeal the widows tax. Please take a moment to send a MOAA suggested message to your elected officials to say, “Congress, I respectfully ask your commitment to get this done — this year.”

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About the Author

Col. Dan Merry, USAF (Ret)
Col. Dan Merry, USAF (Ret)

Merry earned his commission in 1989 through AFROTC and commanded DoD’s Port Mortuary at Dover AFB, Del. He has served in multiple overseas conflicts since the 1990s and has served as the Vice President of Government Relations since August 2016.