Wisconsin veterans groups are sharply criticizing a move by lawmakers to curtail and strip disabled veterans of property tax credit benefits.
The state provides a refundable income tax credit for the property taxes paid on principal dwellings by veterans who are 100% disabled and their surviving spouses. Spouses of veterans killed in Iraq and Afghanistan also receive the credit if they don’t remarry.
Last week the Joint Finance Committee voted to limit the amount of property taxes to be reimbursed to $2,500 a year. The committee also created a means test phase-out, so that if the income of 100% disabled veterans exceeds a certain amount, they will be dropped from the property tax credit program. This also would apply to their surviving spouses and spouses of Wisconsin service members killed in action.
Disabled American Veterans state legislative director Al Labelle called the committee’s action appalling.
“Apparently some committee members feel the sacrifices made by severely wounded, injured and ill veterans are just another budget item,” Labelle said.
Mike “Gunner” Furgal, a Marine who served in Vietnam, doesn’t qualify for the benefit, but he knows veterans who do, including an Afghan veteran suffering from a traumatic brain injury. The committee’s action will be a big topic at this week’s state VFW convention in Green Bay.
“I think it’s a shame when we have a budget surplus that they’re balancing the budget on the back of veterans,” said Furgal, legislative chairman for the Wisconsin VFW. “That’s really a slap in the face of veterans.”
In the fiscal year that ends June 30, the cost to the state for the property tax credit is $17.7 million. The program began as part of the 2005-’07 state budget.
Rep. Dale Kooyenga (R-Brookfield) pointed out that there are plenty of veterans programs, ranging from job training to education benefits, in the next biennial state budget. Lawmakers decided to put a $2,500 cap on the disabled veteran property tax credit and limit eligibility based on income, Kooyenga said, to make it more fair.
“Does it make sense to have a credit that could apply to a millionaire? You could have a million-dollar house but 100% of your property taxes would be paid by the state,” said Kooyenga, a CPA and Army Reservist who served in Iraq.
Kooyenga didn’t know if anyone now receiving the disabled veteran property tax credit is a millionaire.
But Jason Johns, legislative officer for the Wisconsin Military Order of the Purple Heart, said the majority of veterans who are 100% disabled are unable to work and are on fixed incomes; often their spouses can’t work full-time because they’re taking care of the veteran. So the income phase-out probably won’t affect many, though it could affect the working spouses of service members killed in action.
Johns said the $2,500 cap is more problematic, because property taxes vary widely throughout the state, and a $200,000 house in Rhinelander has a lower tax bill than a $200,000 home in Milwaukee.
“The property tax refund when it was established was a big deal for everyone. Property taxes are pretty high in Wisconsin, and this was a benefit for veterans who need it the most,” said Johns, who earned a Purple Heart when he was injured by a land mine in Iraq in 2003.
The income phase-out is $75,000 to $150,000 for veterans filing married-joint tax returns, $60,000 to $120,000 for head-of-household, $50,000 to $100,000 for single, and $37,500 to 75,000 for married-separate tax returns.
Rep. John Nygren (R-Marinette), co-chairman of the Legislature’s Joint Finance Committee, said the average property tax credit is $2,900 for disabled veterans. The credit was targeted after the Legislative Fiscal Bureau reported it was one of the fastest growing tax credits over the last few years.
The program grew from 458 claimants and $1.3 million in property tax claims in 2007 to 5,892 claimants and $17.2 million in 2011.
“Our major concern was about making sure we could continue this with the people who really need it and making it consistent with other tax credit programs” that are income-based, Nygren said.
Kooyenga said limiting the disabled veteran property tax program will ensure veterans with low incomes will continue to get help.
“We went out of our way to make sure people pay their fair share. If you’re making over six figures, then we should look at limiting the credit,” Kooyenga said.
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