Why not forgive military members their deferred taxes come January?

Support for U.S. military service members long has been one of the few positions that unite citizens and elected officials on both sides of the political aisle. However, unless the federal government intervenes before Jan. 1, 2021, millions of active-duty service members and their families will face considerable financial difficulty repaying a tax burden they are forced to accept.

On Aug. 8, 2020,  a presidential executive order provided support for Americans navigating the COVID-19 pandemic by deferring Social Security payroll taxes for those in the workforce. While many of us had the option to opt out, the Department of Defense mandated the deferral  for all military service members whose monthly rate of basic pay was less than $8,666.66. This means the order automatically applied to lower-earning junior officers and enlisted troops, many of whom rely on their regular paycheck to support themselves and their loved ones. 

Lack of choice aside, the deferral delivered welcome support in the short term to our troops who are paid the least. Each troop covered by the order had more money available in their paychecks from September through the end of the 2020 calendar year.

The harmful impact of this change will become evident when the deferral ends on Dec. 31. Following Internal Revenue Service guidelines, the deferred taxes will be taken from troops’ paychecks from Jan. 1 through April 30, 2021, in addition to the taxes normally deducted. Even if a service member leaves the military, they are still responsible for repaying deferred taxes from September through December.

As the situation stands, the arrival of 2021 will force service members to begin paying double their usual federal tax rate to repay the deferred taxes. Military members typically have 6.2 percent of their income withheld for Social Security taxes, but instead they will have 12.4 percent withheld during the first four months of the year. This double tax presents difficult financial turbulence for troops to plan for in the brief time the deferral was active.

The burden is even heavier for service members whose pay rate increased, perhaps because of situations such as earning a promotion, in the four months the deferral was in place. Rather than paying back the amount that would have been withheld from their original pay rate, they instead will pay back a percentage based on their new pay rate after Jan. 1. In the end, they will owe far more than they would have if the deferral had not been in place. 

Anyone who takes an oath to serve this country should not be punished in such a way for admirably performing their duties.

The looming financial impact of the mandatory deferral on service members, both stationed domestically and deployed abroad, is top of mind for military advocates nationwide. In a survey of nearly 900,000 veterans conducted through our Mission Roll Call initiative at America’s Warrior Partnership, tens of thousands of veterans responded to a question about what can be done to help lighten this liability. More than 89 percent of respondents agreed that these taxes should be waived or forgiven, rather than forcing service members to repay them. These civilians stand to gain nothing from tax forgiveness for the military; they are voicing their perspective on what we owe those who serve this country.

Forgiving these deferred taxes is a quick, effective remedy that both the president and Congress have the authority to enact before service members are hit with a considerable financial obligation — one for which they never were given the opportunity to opt out. Members of the armed forces shoulder difficult and stressful responsibilities in service to our country. As the COVID-19 pandemic continues, the government must act to prevent our troops and their families from bearing an avoidable burden in the new year.

Jim Lorraine is president and CEO of America’s Warrior Partnership, a national nonprofit that empowers communities to empower veterans by proactively and holistically supporting veterans. Follow on Twitter @AWPartnership.