[Congressional Record Volume 148, Number 102 (Wednesday, July 24, 2002)]
[Senate]
[Page S7314]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. CARNAHAN:
  S. 2783. A bill to amend the internal Revenue Code of 1986 to restore 
the tax exempt status of death gratuity payments to members of the 
uniformed services; to the Committee on Finance.
  Mrs. CARNAHAN. Mr. President, I send a bill to the desk and ask that 
it be appropriately referred.
  Today I am introducing legislation to correct a flaw in our tax 
system that penalizes the families of those who die while serving in 
our Armed Forces. The Honor Our Heroes Act will restore compassion to 
the tax code. It exempts from taxation the money the government 
provides following the death of an active duty servicemember. This 
payment is known as the death gratuity benefit.
  Families are often crushed by the weight of funeral and other 
immediate expenses after a spouse, parent, or child is killed while 
serving in the military. Congress recognized that, at the very least, 
we owe these men and women assistance with this burden. In 1986, when 
the benefit was set at $3,000, Congress made this payment tax free. 
Over the years, rising costs led Congress to increase the payment to 
$6,000, but Congress did not make a corresponding change in the tax 
code. As a result, today, half of the payment is subject to the income 
tax.
  Now, bereaved families receive this money with a red flag. Families 
are getting get less than the $6,000 Congress meant for them to have. 
We end up giving with one hand and taking away with the other.
  Missouri has given two of her sons in the War on Terrorism. The 
families of these men made the greatest sacrifice possible. We should 
not be asking them to pay taxes on the benefit the government gives 
them to help pay for funeral expenses and other costs. But since 1991, 
thousands of families have had to pay these taxes. During this time, 
especially, when so many of members of the military are putting 
themselves directly in harm's way, we cannot let this unfair taxation 
continue.
  Our colleagues in the House have taken an important step toward 
repairing this flaw, but they neglect the families for whom a future 
increase in the death gratuity would lead to tax liability. My bill 
leaves no such doubt. The Honor Our Heroes Act makes the entire amount 
of the death gratuity payment exempt from taxes, immediately and 
permanently. This bill ensures that payments made to families of 
servicemembers are never taxed again.
  The legislation I am introducing today will make our Nation's 
gratitude tax-free to families coping with the death of a loved one. We 
owe this to our men and women in uniform, and pray that their families 
never have to face such a loss. I encourage my colleagues to support 
this bill.
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