Editor comments on military tax break
By Julie Bisbee
Capitol Bureau
jbisbee@opubco.com
Senate Bill 881 removes the state income tax on federal pay to troops. The exemption will apply to all active military personnel, including National Guard members and reservists.
Senate author Steve Russell, R-Oklahoma City, said military personnel often switch their state of residency on military financial documents to avoid states with income taxes. This law, which takes effect July 1, 2010, will make Oklahoma one of 16 states with an active-duty military tax break.
Military personnel declare their state of residency, even when they are serving in other states or countries. They also pay excise taxes, license plate fees and other state taxes to their state of residency. Russell said the law could prompt more troops to declare Oklahoma their state of residency.
“As a career soldier and years of experience, I know that there are many people from Oklahoma who change their residency to avoid paying state taxes,” Russell said.
Losing military residents could mean a loss of revenue, Russell said. For every 10,000 troops who change their residency from Oklahoma, the state loses about $6 million in motor vehicle fees, he said.
“That loss of revenue exceeds what is paid in taxes,” Russell said. “This shows that we want to grow the number of military in Oklahoma rather than be a donor state.”
The move also makes the state more attractive at times when the Department of Defense evaluates its bases and installations and considers shuttering some, he said.
“This is something tangible that we can do for the troops,” Russell said. “We all like the photo ops and feel-good events, but this actually proves that we really care about our troops.”
BY THE NUMBERS
54,000
Service members who entered the military in Oklahoma
21,000
Service members who claim Oklahoma residency
Source: Sen. Steve Russell, R-Oklahoma City
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