[Congressional Record Volume 143, Number 134 (Wednesday, October 1, 1997)]
[Senate]
[Page S10295]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. JEFFORDS (for himself, Mr. Conrad, Ms. Collins, Mr. 
        Murkowski, Mr. Reid and Mr. Akaka):
  S. 1247. A bill to amend title 38, United States Code, to limit the 
amount of recoupment from veterans' disability compensation that is 
required in the case of veterans who have received special separation 
benefits from the Department of Defense; to the Committee on Veterans' 
Affairs.


        THE SPECIAL SEPARATION BENEFITS IMPROVEMENT ACT OF 1997

  Mr. JEFFORDS. Mr. President, today I rise to introduce the Special 
Separation Benefits [SSB] Improvement Act of 1997. This legislation 
would address the unfair provision that double-taxes veterans who 
participate in the special separation benefits downsizing program run 
by the Department of Defense [DOD].
  Since 1991, in an effort by the DOD to downsize the armed services, 
certain military personnel have been eligible for a special separation 
benefit [SSB]. However, since the inception of this program recipients 
who are subsequently determined to have a service-connected disability 
must offset the full SSB amount paid to that individual through the 
withholding of disability compensation by the Department of Veterans 
Affairs [VA]. Because of these cost cutting provisions, veterans who 
participate in the DOD's downsizing by selecting an SSB lump sum 
payment are forced to pay back the full, pre-tax amount in disability 
compensation--offsetting money that the disabled veteran would never 
see. This is a gross injustice to veterans by double taxing their hard 
earned benefits.
  My bill would ease this double taxation for all members who accept an 
SSB package, and make these alterations retroactive to December 5, 
1991. Thus, service members not able to receive payment concurrently 
since 1991 will be reimbursed for their lost compensation portion that 
was taxed. The near-term costs of this bill were estimated by the 
Congressional Budget Office to be less than $500,000 through the year 
2000 and about $2 million in 2002 --barely a fraction of a percentage 
of our annual spending on compensation and benefits for former military 
personnel.
  Mr. President, I urge my colleagues to join me in correcting the 
double-taxing of veterans' benefits by the Government.
  Mr. MURKOWSKI. Mr. President, I rise today as an original cosponsor 
to the Special Separation Benefits [SSB] Improvement Act of 1997. 
Offered by my colleague on the Senate Committee on Veterans' Affairs--
Senator Jeffords, this legislation will correct a current injustice 
where service connected disabled veterans, who participate in the 
special separation benefits program [SSB], are wrongly doubled taxed on 
their benefits.
  In 1991, the Department of Defense [DOD], in an effort to downsize 
the armed services, established the SSB, which gives military personnel 
a lump sum payment to retire. However, for those veterans who are 
subsequently determined to have a service-connected disability, their 
SSB benefit amount is offset by withholding the veteran's disability 
compensation from the VA. A veteran only receives the SSB benefits 
after taxes are withheld. At the same time, disability compensation is 
not taxed. The injustice is that the veteran must repay with his or her 
disability compensation the pre-tax amount of the SSB payment--in 
effect double taxing the veteran's benefits.
  The Special Separation Benefits [SSB] Improvement Act of 1997 eases 
the double taxation for all members who participated in the SSB program 
retroactively to December 5, 1991. These servicemembers will receive 
payment for their lost compensation portion that was taxed. According 
to the Congress Budget Office [CBO], the near term costs are estimated 
to be less than $500,000 through the year 2000. For this small amount, 
Congress has the opportunity to correct an injustice against our 
veterans who have given so much.
  I hope that my colleagues can join me in cosponsoring this 
legislation.

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