Armed Forces Tax Fairness Act of 2003

Mr. GRASSLEY. Mr. President, it is a privilege for me to be before the Senate again in a working relationship with Senator Baucus, the ranking Democrat of the Senate Finance Committee. It is another example of legislation that comes out of our committee in the bipartisan tradition of our committee, and this one came out, I believe, with unanimous support.

I very much appreciate not only the cooperation of Senator Baucus, but other members on the Democratic side of the committee, for helping us move along a very important piece of legislation, one that was very important last fall when we did not get it passed but more important now because it deals with our people in the military and because of what is going on in Iraq at this moment.

We are here today to consider the Armed Forces Tax Fairness Act which the Finance Committee developed during this and the last Congress. This is a particularly somber time in our country as we continue our dangerous operations in the country of Iraq.

The contributions of the men and women of our uniformed services, our reservists and our National Guard, are foremost in our minds, and our thoughts and prayers remain with their loved ones and with families. I particularly wish to extend my condolences to the family of SGT Bradley Korthaus of Davenport, IA, whose death was reported yesterday. SGT Korthaus died while serving his Marine Corps engineering unit in southeast Iraq. So we have before us legislation affecting all of these men and women, legislation to ensure that our service men and women and their families are treated fairly under tax law. It seems to me this legislation is particularly timely.

The military bill we consider today rectifies a number of inequities faced by the uniformed services, our National Guard, and even Foreign Service personnel. For example, this legislation before the Senate now ensures that the families of military personnel called into active duty are not disadvantaged under the home sale exclusion provisions that affect many homeowners in the United States because most Americans are permitted to exclude built-in gain on the sale of their personal residence if they meet certain residency requirements.

The situation for military personnel owning a home is entirely different because we know that military personnel, called to active duty or asked to relocate, do not have the flexibility to meet these residency requirements and are consequently then adversely impacted by these rules. The Tax Code is unfair to them because they have no control over where they are going to live because they are called to meet the command of a military commanding officer to move out to someplace else.

The legislation, then, would suspend the residency test for periods of active duty aggregating no more than 10 years. We should obviously not punish members of our military and their families who are asked to relocate in the name of serving their country and protecting our national security, protecting our freedoms. To that extent, the Tax Code is unfair so that they get punished in ways that people who are nonmilitary and can control more of their lives would not be punished.

Another important issue weighing on the minds of many military personnel called into active duty is the well-being and the care of their children. The Federal Government works to ensure that military families have adequate and affordable access to child care, as we should. This is an important function of the military during peacetime, but it is essential, even more so, during periods of conflict such as the one we are experiencing in Iraq.

The need is that much more pressing obviously for single parents and dual military career families. This legislation clarifies that dependent care benefits provided to families of the uniformed services will not be treated as taxable compensation.
In recent days, the press has focused significantly on the impending service contributions of our Reserve, military people, and National Guard members. To date, we have more than 200,000 reservists and National Guard being called to active duty, most of them called for the sole purpose of assisting Operation Iraqi Freedom. This includes, in my own State of Iowa, 3,500 men and women who have been called to active duty. We have begun to rely increasingly on these service personnel to defend our borders and serve and protect in other areas of the world, meeting their commitment to our total force concept of the military.

Many of Iowa's reservists have contacted me to emphasize that reservists who travel for training exercises that they do on weekends, or any other time, are required to spend their own money for these travel expenses. If our military is not able to reimburse reservists for travel expenses related to training assignments, we should, at a very minimum, allow these men and women to fully deduct those expenses on their Federal tax returns and not be hit by some threshold that precludes most of these deductions from being taken. Reservists should not be in a position of subsidizing their own military training.

Among other things, this legislation also ensures that military personnel serving in Secretary of Defense-designated contingency operations—and this would include Operation Desert Storm and presumably now Operation Iraqi
Freedom—receive appropriate relief from the administrative burdens that our tax laws foist upon them during participation in those operations.

In closing, we all thank the men and women of the U.S. military and Reserve components. The onset of the conflict in Iraq, no doubt, renews our deep appreciation for the tremendous sacrifices and risks that they undertake to protect the freedom of American people and others around the world. It is a perfect time then to ensure that our military is more fairly treated under our country's tax laws. That is what this legislation is all about.

So I thank my colleagues for their consideration of this legislation. I urge each of my colleagues to vote for this very important tax fairness measure, particularly considering the importance of it at this time of sacrifice on the battlefield of Iraq.

I yield the floor.