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Bill would refund some taxes of fallen troops

Aug. 13, 2010 - 12:10PM   |   Last Updated: Aug. 13, 2010 - 12:10PM  |  
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A California lawmaker wants to refund Social Security taxes when a service member dies in the line of duty.

In what he says would be a new death benefit for survivors, Rep. Jerry McNerney, D-Calif., wants to return to the family any Social Security payroll deductions ever paid by a service member, including self-employment taxes.

His bill, HR 5921, would make the payments retroactive to cover deaths in the line of duty since Sept. 11, 2001. Line-of-duty deaths would include any member of the armed forces killed as the direct result of armed conflict or while in other hazardous service, or while training under combat conditions or using combat equipment.

The amount of the payment would depend on a person's age and income, but it would equal roughly 6.2 percent of gross income for most service members. An E-5 with six years of service, for example, will have paid about $5,500 in Social Security payroll taxes, officially called the Federal Insurance Contributions Act, or FICA, Tax.

For someone who has been working longer, such as a self-employed National Guard member with 20 or more years of service, the tax refund could be more than $150,000.

Technically, payments would not be refunds. The bill is written so that survivors would be paid an additional death benefit calculated to match Social Security payments made by a member before and during service. Funding for the new benefit would come from the Old-Age and Survivors Insurance Trust Fund, the U.S. Treasury account where payroll taxes are deposited.

Dipping into the Social Security trust fund to provide a death benefit makes McNerney's bill a controversial idea that is unlikely to pass until lawmakers are able to study a report coming in December from the independent Commission on Fiscal Responsibility and Reform, known as the "debt commission."

That report might recommend an overhaul of Social Security benefits and other federal entitlements, according to congressional aides who work on military benefits.

McNerney's bill, the Support for Families of the Fallen Act, was referred to the House Ways and Means Committee, which is responsible for Social Security, and to the House Armed Services Committee, which oversees military death benefits.

In a statement, McNerney said the bill grew out of his meetings with military survivors.

"One of my most somber responsibilities is to visit with families who have recently lost a loved one fighting overseas," he said. "I've seen their grief, and I believe that providing extra help to these families is the right thing to do."

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