Should States Tax Military Pensions?

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A growing number of states are considering exempting veterans’ pensions from being taxed, but does this policy make sense, and is it fair to the average taxpayer? In his article for Slate, “Veterans Should Pay Taxes Like Everyone Else,” reporter Alec MacGillis writes that currently, nearly half of all states don’t tax military pensions, including seven states which don’t tax personal income at all, and that granting further tax exemptions to military personnel would only benefit those who stayed in for 20 years or more.


“In effect, the case for pension exemptions takes two big drivers of government policy—the ‘help veterans’ motivator and the “attract job-creators” one—and fuses them together,” writes MacGillis. “But proponents can’t have it both ways. Either military retirees are a group that needs an extra boost, or they are a privileged class that, by virtue of the skills they’ve acquired in their military careers, are economic winners that a state wants to have for itself just as it wants the next Google server farm.”

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