Statements on Introduced Bills and Joint Resolutions

Floor Speech

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Mr. KING. Mr. President, I rise today to speak about a bill that I am introducing today, along with Senator Coons and Senator Portman, called the Stop Taxing Death and Disability Act. It is a bill that responds to a tragic and unintended and frankly unsupportable policy--an inadvertent policy, I believe--of our government. Senator Coons has been a great leader on this, and I also wish to express my appreciation to Senator Portman for joining.

Not long after I was elected, I was contacted by Donald and Nora Brennen, a couple from Topsham, ME, which is just across the river from my hometown of Brunswick. They are both retired Navy veterans, and they experienced a tragedy in their lives that has inadvertently entangled them with the Internal Revenue Service in a way that I think makes no sense.

Their son Keegan had graduated cum laude from the New Hampshire Institute of Art. He had taken on Federal and private loans in order to enable himself to get his education. He had a bright future. Unfortunately, barely 6 months after he graduated, he passed away suddenly from a non-traumatic brain aneurysm--a tragic loss which I think any of us as parents can only dimly appreciate or understand or empathize with. It is so unthinkable to lose a child in this way that it is just hard to conceive of.

The Federal Government has recognized this kind of situation and forgives the student loan indebtedness of students who pass away in this situation. The Federal Government gets that part right. Congress has already directed the Department of Education to forgive outstanding balances for borrowers who pass away, as well as those funds borrowed by parents on behalf of a child who passes away. The same forgiveness provision, by the way, is also permitted for borrowers who suffer total and permanent disabilities that are certified by the Social Security Administration and the Department of Veterans Affairs. So far, so good.

While the Federal Government solved that part of the problem, it inadvertently created another by recognizing that the Tax Code generally treats forgiven student debt as income in the year it is discharged. Because of this, this family in Maine who lost their son was suddenly--overnight--faced with a $24,000 tax bill and a $6,000 tax bill from the State of Maine because of its conformance with the Federal law.

In other words, you lose a child. The loans are forgiven, but the forgiveness is treated as taxable income, and suddenly, in the midst of your grief, you are faced with paying an enormous--one big tax bill on the entire amount of the loan being forgiven.

In this case, the Brennens couldn't possibly pay this in one instance, and it makes no sense from the point of view of policy. It is the opposite of compassion. It is literally adding insult to tragic injury.

Since 2012 when they lost their son, the Brennens have struggled to make ends meet. They had to go into their 401(k). They had to make some kind of arrangement with the IRS, and now they are in the process of paying this enormous tax off.

This family in Maine is not alone in facing this burden. My office has heard from other constituents in our State, and our research indicates that there are at least several thousand across the country who are facing a tax bill in the midst of the most tragic and difficult circumstances. This just isn't right. It is something we should fix.

As I said, the Department of Education does have it right, and they are working on this, but until this unresolved tax issue is resolved, they can't move forward with an efficient way to provide these discharges.

The bill we are introducing today with Senator Coons and Senator Portman, the Stop Taxing Death and Disability Act, is a commonsense, compassionate, and sensible response to this tragic event. If we are going to forgive the student loan debt, which makes total sense and has been the law for some time, to then turn around and say that loan forgiveness is itself taxable--so in the midst of your grief, you are presented with a massive tax bill--just isn't right. It is not fair, it is not right, it is not compassionate, and it isn't consistent with the earlier decision that has been made to discharge these loans under these tragic circumstances. I think it is time for Congress to add the death and disability exemption to the Tax Code.

I thank Don and Nora Brennen for sharing this story with me--it can't be an easy story to share--and for their service to this country in the U.S. Navy and their commitment to doing the right thing for their family.

I hope and believe we can find it in our wisdom here and in our hearts to act on this bill to be sure that other families in America in the midst of their grief do not have to face this tragic situation.

Again, I thank Senator Coons and Senator Portman for joining me in this bipartisan effort to right a wrong, to correct a mistake, to act in the best principles of this institution, to act on behalf of this small group but important group who suffered loss, to act to relieve this burden that should never have been in place in the first place.

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