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W.Va. vet tax break a good idea, if affordable

February 01, 2000

West Virginia's nearly 200,000 veterans will get a tax break on their pensions in coming years, if voters agree with a proposal being readied by state lawmakers. But like many who want to honor the veterans for their past service, we need to know how much the proposal is going to cost.

That's because, according to an analysis of the state's proposed budget done for The Associated Press, the $2.6 million spending document is a tight and will be in balance only if the state receives a projected $19 million from the sale of 10-year liquor licenses. To add another element of uncertainty, state revenues are expected to drop this summer by $10 million to $30 million.

As written, the proposal would depend on voters' approval of a constitutional amendment that would prevent other groups from seeking similar tax breaks. If it passes, 3 to 5 percent of a veteran's pension, retirement or disability income would be exempt from taxation. Under a formula that's still being debated, veterans with long years of service could have more of their pensions exempted than those who only served short terms.

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How much would it cost? It's tough to say. Several bills have been filed to do essentially the same thing, and some of them would cover a veteran's spouse as well.

From the standpoint of fairness, the bill makes sense, because Mountain State residents are already eligible for a number of pension-related tax breaks, because of their age and previous employment. Firefighters and police, for example, can qualify to have their entire pension income exempted.

What it comes down to, unfortunately, is whether the state can afford it. The temptation in an election year is to believe the revenue projection that backs up your program, and to worry about the fallout somewhere down the road. We suggest that if the state truly wants to honors its veterans, it will craft a system that won't need major repairs a year down the road.

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