Senate Approves Tax Breaks for Military Personnel

Legislation to ease tax burdens for military personnel and their families won unanimous Senate support Thursday, with lawmakers determined to show their gratitude to the men and women risking their lives in Iraq.

"One of the best ways we can support our troops is to do everything we can to assure that they and their families are taken care of," said Sen. Max Baucus of Montana, top Democrat on the Senate Finance Committee.

The legislation, which passed 97-0, excludes military death benefits from taxable income, allows reservists and National Guard to deduct travel expenses related to their service, and assures that service members forced to make frequent moves will not be subject to capital gains taxes on the sales of their homes.

The vote came as Congress considered a $74.7 billion request from the White House to help finance the conflict in Iraq and the war against terrorism.

The military tax relief legislation stalled in the last session of Congress when it was linked to other tax legislation. It gained new momentum when war began with Iraq. It is an opportunity, said Senate Finance Committee Chairman Charles Grassley, R-Iowa, "to show support for our men and women in uniform in faraway places like Iraq."

The House, after separating the military tax breaks from a package of other tax-related measures, passed a similar version last week with a 422-0 vote. The two sides must still reconcile their differences before sending a bill to the president.

The Senate version gives income tax relief to families of the astronauts killed in the Columbia space shuttle disaster. The House has taken similar steps in a different bill.

Among other differences, the House limits above-the-line deductions -- available whether or not taxpayers itemize deductions -- to cover out-of-pocket expenses for reservists traveling to training at $1,500. The Senate has no such limit. "Our service men and women should not be put in the position of subsidizing their own training," said Sen. Mike DeWine, R-Ohio.

The Senate bill also anticipates recouping some $700 million over 10 years by enacting new restrictions on people who renounce their U.S. citizenship to avoid paying taxes. The House, in a separate bill, moves to toughen current enforcement against such tax dodgers, which Baucus said would bring in less than half the revenue.

Grassley said that, with the expatriate provisions, the Senate bill has measures to make up the entire 10-year, $1.1 billion cost. The House military tax bill does not have offsets.

Both bills, with minor differences, make tax-free the $6,000 burial benefit paid to families of soldiers killed in action. Congress doubled the benefit during the first Gulf War in 1991, but half of that is still subject to taxes.