Supporting older adults will be a continuing problem in Delaware since the youth are leaving. Who will provide services?
The state had an opportunity to get ahead of problems associated with the aging of Delaware with Senate bills 48, 91 and 188 in the last decade, but it failed to act. Now, it may be too late.
These bills all dealt with making retired pay for military members 100% state tax-free. Civilian retirement happens in the late 60s and 70s, often signaling the end of working life. For service members, who often enter the military at age 18 and can only serve 20 years, retirement means the start of a second career.
Eighty percent of military retirees are 38-year-old sergeants whose retired pay will be less than $40,000 a year. Most of them have kids in college and a working spouse. If their military retired pay would be tax-free, they would come here with their terrific work ethics and multitude of skills, bringing their working spouses along.
Whatever business they would start or whatever salary they would earn working for someone else beyond their retired pay would be fully taxable. Most military personnel earn more in their second careers than they receive in retired pay. By not forgiving the lower retired pay, Delaware is also foregoing taxing the higher, second-career pay.
While Delaware recently passed a bill to allow military pay to be taxed at the same rate as the over-65 rates for all retirees, that is not enough to attract military retirees to our state. Seventy-five percent of states do not tax any income or do not tax military retired pay. When talented, drug-free, enterprising service members make their retirement plans, they do not consider Delaware.
Making military retired pay tax-free is not about “supporting the troops.” It’s about attracting a vibrant workforce of retired service personnel with a variety of skills, who will work full second careers in Delaware, being taxed on their new salaries and providing services our aging population needs.
Retired U.S. Army Col. Eugenia Thornton
President, Military Officers Association of America’s Dover chapter
Reader reactions, pro or con, are welcomed at civiltalk@iniusa.org.
