Brown proposes exempting military retirement income from taxation in Maryland

Anthony G. Brown as he kicked off his campaign for governor in May. (Photo by Astrid Riecken For The Washington Post)

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Maryland Lt. Gov. Anthony G. Brown called Monday for fully exempting military retirement income from state taxation for veterans earning less than $150,000 a year, a move he said would reflect “our gratitude” for their service to the country.

The proposal was part of a package of initiatives put forward by the Democratic gubernatorial hopeful, timed for release on a Veterans Day when Brown and his 2014 rivals were offering thanks and making appeals to military personnel around the state.

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If elected governor, Brown said he would also create “treatment courts” with the aim of connecting troubled military veterans to mental health and drug addiction services as an alternative to incarceration.

He also proposed state-backed “bridge loans” for veterans waiting for federal disability claims to be processed; a “challenge program” to encourage private employers to hire more veterans; and an increase in funding for a rental housing program that serves veterans.

“We’ve made a lot of progress to support veterans in Maryland, but we can do more,” said Brown, a colonel in the U.S. Army Reserve who served a tour of duty in Iraq.

About half of the states in the country do not tax military retirement income. In Maryland, only the first $5,000 is exempt from state and local taxation.

One of Brown’s Democratic rivals, Attorney General Douglas F. Gansler (D), has previously proposed expanding the exemption for veterans but not yet put forward a formal plan. Gansler, who has also suggested exempting the retirement income of teachers and first responders, said Monday that “it’s important to reward those who’ve served” and said he would not include an income cap for veterans in his plan. 

“The threshold is you’ve served for your country in the military,” said Gansler, who on Monday greeted veterans waiting outside a Golden Corral restaurant in Largo that was offering them free meals.

Brown’s proposed tax exemption would be phased in over eight years, according to his campaign.

A bill with a similar aim that was introduced by Del. William J. Frank (R-Baltimore County) this year was projected to cost the state more than $40 million in revenue once it is fully phased in. That bill did not pass. Brown aides suggested that the cost of his plan would probably be somewhat less than that because of the $150,000 cap on income, which was not part of the Republican’s bill.

An analysis released with Brown’s tax exemption plan Monday put the cost at $17.5 million in fiscal 2019, which would be the final year of Brown’s first term, were he elected. The analysis did not continue beyond that, even though the exemption would not be fully phased in at that point.

Nearly 50,000 veterans receive military pensions in Maryland, averaging about $27,000 a year, according to the analysis of Frank’s bill this year.

As of fiscal 2019, the total cost of Brown’s package of veterans initiatives would be about $24 million, according to his campaign.

Gansler said Monday that separate courts to address veterans’ problems is “an interesting concept” but that it remains to be seen how the logistics would work.

Gansler’s campaign also knocked Brown for the lengthy wait that veterans seeking disability claims often face from a federal regional office in Baltimore.

“The lieutenant governor has not fixed that problem,” said Gansler spokesman Bob Wheelock. “The Gansler-Ivey team will.”

Wheelock was referring to Gansler’s running mate, Del. Jolene Ivey (D-Prince George’s), who joined Gansler on Monday outside the Golden Corral.

In a statement Monday, Brown cited several steps he has taken with Gov. Martin O’Malley (D) to help veterans during the past seven years.

Those include legislation passed this year that is intended to make it easier for veterans to be credited for skills they’ve mastered in the military when seeking civilian jobs or returning to school. First lady Michelle Obama attended the signing ceremony for that bill.

 
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