AUGUSTA – With a war as a backdrop, on Thursday the state was asked “to be more welcoming” to retired veterans and stop taxing their pensions.
Maine now exempts the first $6,000 of military pensions. Despite a state budget deficit of more than $1 billion, veterans asked that their entire pension not be taxed. The issue isn’t one of fairness, they said, but rather a way Maine can expand its economy.
“We’re not here asking for a handout. If we can get a break, it would be a plus for the state of Maine,” said retired Marine Gary Lawyerson of Waldoboro. “This would bring people back into Maine,” Lawyerson said. He retired from the Marines at 44, and between himself and his wife make $150,000 a year, he said.
Career military people often retire in their mid ’40s and get second-career jobs, for which they pay income tax. When retiring from the military many states recruit them and don’t tax their pensions. Veterans retire relatively young, are well trained and get second-career jobs
The bill’s sponsor called the second day of the war against Iraq “a fitting day” to air the proposal in a public hearing.
Rep. Janet McLaughlin, D-Cape Elizabeth, said her bill would cost the state between $4 million to $10 million a year, and allow each retired veteran to keep about $1,000 of their pension now taxed.
Veterans retire relatively young, are well trained and get second-career jobs, she said. If each earned $30,000 at their second-career job, what they would pay in income tax would more than pay for the exemption, McLaughlin said. “This is a very sensible bill.”
No one spoke against the proposal, but members of the Taxation Committee asked tough questions.
Because of severe financial woes, Gov. John Baldacci has proposed cutting money to colleges and universities, payments to hospitals and providers, postpone paying debt, and raising co-payments of some on MaineCare. Committee members said they want to support veterans, but considering the deficit where would the money to pay for the exemptions come from?
McLaughlin said she hopes her bill would be worked into comprehensive tax reform expected to be considered later this year.
While he supports veterans, Baldacci is unlikely to support the proposal “and anything that costs money,” said Director of Communications Lee Umphrey.
Local co-sponsors of the bill include Rep. Philip Cressey, R-Baldwin; Rep. Ted Heidrich, R-Oxford; Sen. Neria Douglass, D-Auburn; Rep. Elaine Makas, D-Lewiston; Rep. Lillian O’Brien, D-Lewiston; Rep. Nancy Smith, D-Monmouth; and Sen. Peggy Rotundo, D-Lewiston.
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