[Congressional Record Volume 151, Number 69 (Monday, May 23, 2005)]
[House]
[Pages H3712-H3714]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               HEROES EARNED RETIREMENT OPPORTUNITIES ACT

  Mr. SAM JOHNSON of Texas. Mr. Speaker, I move to suspend the rules 
and pass the bill (H.R. 1499) to amend the Internal Revenue Code of 
1986 to allow a deduction to members of the Armed Forces serving in a 
combat zone for contributions to their individual retirement plans even 
if the compensation on which such contribution is based is excluded 
from gross income, and for other purposes, as amended.
  The Clerk read as follows:

                               H.R. 1499

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Heroes Earned Retirement 
     Opportunities Act''.

     SEC. 2. COMBAT ZONE COMPENSATION TAKEN INTO ACCOUNT FOR 
                   PURPOSES OF DETERMINING LIMITATION AND 
                   DEDUCTIBILITY OF CONTRIBUTIONS TO INDIVIDUAL 
                   RETIREMENT PLANS.

       (a) In General.--Subsection (f) of section 219 of the 
     Internal Revenue Code of 1986 is amended by redesignating 
     paragraph (7) as paragraph (8) and by inserting after 
     paragraph (6) the following new paragraph:
       ``(7) Special rule for compensation earned by members of 
     the armed forces for service in a combat zone.--For purposes 
     of subsections (b)(1)(B) and (c), the amount of compensation 
     includible in an individual's gross income shall be 
     determined without regard to section 112.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Texas (Mr. Sam Johnson) and the gentleman from Michigan (Mr. Levin) 
each will control 20 minutes.
  The Chair recognizes the gentleman from Texas (Mr. Sam Johnson).


                             General Leave

  Mr. SAM JOHNSON of Texas. Mr. Speaker, I ask unanimous consent that 
all Members may have 5 legislative days within which to revise and 
extend their remarks and include extraneous material on H.R. 1499.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, I rise in support of backing our troops, of backing them 
to the hilt, with the Heroes Earned Retirement Opportunities Act, or 
the HERO Act, H.R. 1499, introduced by the gentlewoman from North 
Carolina (Ms. Foxx).
  As you know, people may contribute to $4,000 a year to the popular 
individual retirement account, IRA. However, the funds that go into an 
IRA are supposed to be post-tax money. Well, when you are serving your 
country in Camp Victory in Iraq or working in Afghanistan, your combat 
pay is tax-free. That is right, it is tax-free; and it ought to be. The 
theory behind that is if you are going to volunteer to risk your life, 
serve your country and protect our great freedom, you should not be 
taxed.
  As a result, some military men and women come home serving in harm's 
way with money that they would like to put into an individual 
retirement account, but they cannot. It is against the law. That is 
wrong. The HERO Act changes that outdated and unintended tax law so 
that our soldiers, sailors, Marines and airmen can save some of that 
money for their retirement for their families' golden years.
  Crazy as it may seem, right now these men and women come home with 
much more disposable income, yet they are not allowed to save some of 
it in an IRA; but they can spend it on cars, new clothes, family 
vacations. Yes, all of those things are nice, especially when you have 
been in the desert for 9 months and you just want the creature comforts 
and luxuries of home for you and your family. But those things are 
temporary. Retirement savings is about making a better future for 
yourself and your loved ones, and our troops should have the option of 
saving for retirement if they want to.
  I say it is high time we change that, and that is what the HERO Act 
is all about. It is about tax simplification, it is about retirement 
savings, it is about helping our military who are out there fighting 
for us.
  Mr. Speaker, I reserve the balance of my time.
  Mr. LEVIN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I stand today in support of H.R. 1499. This bill is 
supported by my Democratic colleagues. We acknowledge fully the work of 
our military personnel who continue to perform for our Nation. We honor 
their bravery and their sacrifice. Therefore, it goes without saying 
that we endorse this effort by this Congress to make it possible for 
these men and women to take advantage of every tax benefit

[[Page H3713]]

that is available to them, including saving for their retirement.
  H.R. 1499, as my colleague and friend, the gentleman from Texas (Mr. 
Sam Johnson), has said, would allow our servicemen and -women to treat 
their compensation, received while serving in combat, as taxable income 
in order to help them meet the income eligibility retirement for making 
contributions to an individual retirement account.
  At a recent hearing of our committee, two of our five witnesses 
highlighted the large shortfall in retirement savings many of our 
workers in this country face. I am sure that many members of the 
military fall within this group. This bill is a small step in the right 
direction of closing that gap.
  Other larger steps need to be taken. For example, Democratic Members 
of this Congress are hopeful that we can work with our Republican 
colleagues to preserve another tax benefit that may be of even greater 
help to many military families. A provision in current law would permit 
military families to treat combat pay as taxable compensation for 
purposes of claiming the Earned Income Tax Credit. This provision is 
set to expire at the end of this year.
  The EITC is a refundable credit many low- and middle-income taxpayers 
can claim when they file their Federal tax returns. Eligible families 
may claim a portion of their credit ratably during the year. The EITC 
helps to relieve the Federal tax burden on many families who are 
working full-time yet find themselves at or below the poverty level.
  We had hoped that this provision could be included as part of the 
bill before us today to further help military families. However, we 
were assured that this provision will be taken up later in the year, 
and we will continue to press for the extension of this provision 
before it expires.
  Also let me finish by expressing my hope and the hope of so many on 
my side of the aisle that this Congress and the administration will 
meet their responsibilities to our veterans on health, on re-
employment, and so many other major needs of those in the military and 
the veterans of the United States of America.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield such time as she may 
consume to the gentlewoman from North Carolina (Ms. Foxx), the author 
of the bill.
  Ms. FOXX. Mr. Speaker, I want to thank the gentlemen from Texas and 
Michigan for their eloquent words on behalf of this bill. I am truly 
honored to be here today, Mr. Speaker. I am honored because the mere 
consideration of this bill represents the greatness of our republican 
democracy.
  At this time a year ago, I only dreamed of coming to the floor of 
this House and working for the people of the Fifth Congressional 
District in North Carolina. Here I am today promoting a bill I wrote to 
help those very constituents who deserve it most.
  Just a few months ago, the father of Army Specialist Michael Hensley 
from my district in Clemmons, North Carolina, contacted me with a 
problem that his son and many of our other brave soldiers are facing. 
My constituent, Specialist Hensley, wanted to do the responsible thing 
by making the maximum allowable contribution to his individual 
retirement account, but found out that because of the nature of his 
wages, he would not be able to contribute to his nest egg this year. 
Thanks to the Republican leadership of this House and the bipartisan 
support from the minority, we stand here this afternoon to solve this 
problem.
  Mr. Speaker, our current Tax Code wrongfully prohibits many of our 
brave men and women serving in combat zones from taking advantage of 
individual retirement accounts, or IRAs.
  Most soldiers serving in these combat zones are paid in wages 
designated as military hazard pay. As deployment times have grown 
longer and longer, many soldiers now serve entire calendar years 
overseas, making their yearly compensation consist of hazard pay 
exclusively. These wages are not taxed; nor should they be. However, 
since this compensation is nontaxable, the wages are not eligible for 
IRA contributions. This is entirely unfair.
  As we all know, IRAs are an excellent tool for responsible retirement 
savings, and responsible retirement savings should be encouraged for 
everyone, but especially for those who take up arms in war zones and 
fight for our freedom. The men and women defending America in harm's 
way overseas should not be excluded from fully participating in the 
important retirement investment opportunity that IRAs provide because 
of a glitch in our Tax Code. H.R. 1499, the Heroes Earned Retirement 
Opportunities, or HERO Act, will correct this serious injustice. The 
HERO Act simply designates combat hazard pay earned by a member of the 
Armed Forces as eligible for contribution to retirement accounts.

                              {time}  1515

  The legislation, which is endorsed by the Reserve Officers 
Association and the Military Officers Association of America, would not 
actually tax these wages, it would merely allow them to be invested in 
the same retirement accounts available to all Americans.
  To quote the Military Officers Association of America in their letter 
of support for the bill, ``This change makes perfect sense in view of 
all we are asking our service members to do in the War on Terror in 
Iraq, Afghanistan, and elsewhere.''
  I could not have said it better myself.
  Mr. Speaker, our heroes defending America overseas certainly deserve 
the same access to retirement savings that we receive. In fact, we 
should be encouraging and even facilitating retirement savings whenever 
possible. Americans need to take responsibility for and control of 
their retirement. Those responsible enough to save their hard-earned 
wages should be rewarded, not burdened with taxes and regulations.
  I would like to thank our Republican Majority Leader, the gentleman 
from Texas (Mr. DeLay), as well as the gentleman from California 
(Chairman Thomas) for recognizing the importance of this bill and for 
expeditiously bringing it to the floor of this House.
  I would also like to thank the gentleman from California (Chairman 
Hunter) for his service to our Nation in Vietnam, for his excellent 
leadership of the House Committee on Armed Services, and for 
cosponsoring and supporting this great bill. His commitment to our 
troops is to be applauded.
  A special thanks to the gentleman from Texas (Mr. Johnson) for his 29 
years of service to our Nation, and for his cosponsorship of this bill 
and his assistance in the Committee on Ways and Means to bring the bill 
to the floor. He recognized immediately that this is a common-sense 
solution.
  Lastly, I would like to thank my staff members, especially Bob Honald 
and Deana Funderburk for their support and effort to get a good idea 
transformed to good legislation. I urge all of my colleagues to help 
right this fundamental wrong by voting for this straightforward, 
common-sense legislation.
  Mr. LEVIN. Mr. Speaker, I thank the gentleman from Texas (Mr. Sam 
Johnson) for his leadership on this bill.
  Mr. Speaker, I yield back the balance of my time.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, the Hero Act is going to help our combat troops by 
modifying a tax law that has unintended consequences, given their 
situation. Most of us know that IRA contributions are limited to $4,000 
this year, and the cap on annual contributions will increase to $5,000 
in 2008.
  All of this is temporary legislation, but we would like to have it 
permanent, as well, I say to the gentleman from Michigan (Mr. Levin).
  According to the Joint Committee on Taxation, this bill would provide 
$31 million of tax benefits to military families over the next decade. 
H.R. 1499 provides meaningful assistance to our troops that we can all 
support as the House considers ways to improve the retirement security 
for Americans.
  I work on retirement legislation in my membership on both the House 
Committee on Ways and Means and the House Committee on Education and 
the Workforce, and I look forward to meaningful legislation moving 
forward from both committees in the near future.
  However, this legislation needs to move on its own as soon as 
possible. Our troops are earning combat pay in

[[Page H3714]]

dangerous situations, and to the extent that they can save some of it 
for their long-term needs, I think we ought to encourage them to do so.
  We will pass this bill with no controversy, and I hope our colleagues 
in the other body follow suit in the near future. It is the right thing 
to do.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Gingrey). The question is on the motion 
offered by the gentleman from Texas (Mr. Sam Johnson) that the House 
suspend the rules and pass the bill, H.R. 1499, as amended.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill, as amended, was passed.
  The title of the bill was amended so as to read: ``A bill to amend 
the Internal Revenue Code of 1986 to allow members of the Armed Forces 
serving in a combat zone to make contributions to their individual 
retirement plans even if the compensation on which such contribution is 
based is excluded from gross income, and for other purposes.''.
  A motion to reconsider was laid on the table.

                          ____________________