I never wore the uniform. However, I have deep respect for America's servicemen and women that have served or currently serve in the military. The sacrifice these patriots – and their families – make is honorable, and I know our nation joins me in thanking them for their service.
Public policy often creates bogus disincentives for the military. From school choice to occupational licensing reform, the military often receives the short end of the stick. Tax policy is no different. The current tax regime at the Internal Revenue Service treats the military the same as an analyst at the IRS. But there is no comparison between the public service of the staff at the IRS with the brave and courageous men and women serving in the military.
As a U.S. Senator my first bill will be to abolish federal income taxes (including the taxation of military pension benefits) and payroll taxes for active-duty members of the military and for veterans who received an honorable discharge and whose taxable income does not exceed $2 million.
No federal income taxes. No Social Security payroll taxes. No Medicare payroll taxes.
And the eight million veterans receiving Social Security should not be taxed on their Social Security benefits either. Why any American is taxed on a cash benefit their own taxes financed is a head-scratcher for me.
Eliminating these taxes for the military and veterans is the best way for America to thank them for their service.
Tax policy drives economic behavior. And while President Biden's Department of Defense has adopted leftist policies that hurt military recruitment, Congress can pass new tax reforms that will help fill the needs of recruitment and military readiness, while rewarding those who have already served.
Since Biden took office, inflation has accumulated 17.38 percent, which is 63 days of earning power. Cost-of-living-adjustments (COLAs) simply aren't enough. Abolishing these taxes for the military and veterans will provide a massive increase in earnings for many American households that are struggling and living paycheck to paycheck.
America's all-volunteer military totals about 1.3 million people, and according to the Census Bureau about 16 million Americans are veterans. Abolishing federal income taxes for roughly 17 million Americans is not going to lead to a fiscal crisis. This tax reform will bring the American Dream back within reach for millions of Americans.
I estimate this policy change would reduce revenues by about $383 billion each year. But the macroeconomic effects of this tax reform would be tremendous, especially for the veteran population, who would seek to expand their investments, entrepreneurship, and risk-taking. It would result in higher productivity in America, higher wages for all workers, and more job creation. Moreover, cutting taxes for veterans will reduce veterans' homelessness and dependency on federal welfare benefit programs.
The fiscal crisis is a result of excessive federal spending and the Federal Reserve printing money. Tax and regulatory reforms that provide for rapid economic growth and investment are the best way to reverse the economic crisis.
Many important reforms from the Tax Cuts and Jobs Act of 2017 expire at the end of 2025. According to the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT), permanently extending the 2017 tax law would cut taxes by $3.5 trillion over ten years.
Finally, we must address the claim uttered by far too many so-called tax experts that cutting taxes or reducing revenues increases the deficit. The deficit is driven by federal spending, not by federal tax policy.
Taxation is theft. And the $7 trillion spending increase since COVID is also theft because those enormous spending increases carry the promise of future tax increases. America has a spending problem, not a revenue problem. Need proof? The federal government continues to collect historic levels of revenue, is projected to confiscate $59.7 trillion from hard-working Americans over the next 10 years, and still can't manage to balance the budget.
The Senate will need new leadership with creative ideas like this one to reward our military and grow our economy like never before. This is an America First policy that we can all get behind.
Scott Parkinson is a Republican candidate for the U.S. Senate in Virginia.
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