» Vet tax credit:
Policy-makers concerned about cost of state credit
A tax credit that gives disabled veterans a break on their property taxes has climbed 28-fold over a decade and could go higher if proposed legislation is approved.
MADISON - A tax credit that gives disabled veterans a break on their property taxes has climbed more than 28-fold over a decade and could go even higher if proposed legislation is approved.
Advocates for the proposal say it’s a worthwhile investment that helps veterans who have sacrificed for their country to remain in their homes when property taxes go up.
“You’ve got vets who are having to relocate and move out of their houses because the property taxes have escalated so that they’re totally unreasonable now,” said Tim Phiers, a disabled veteran and former veteran services officer. “Vets can’t afford it. Especially with their disabilities and loss of earning potential.”
Lawmakers want to aid veterans, but the rising price tag has concerned policy-makers, said Rep. John Nygren (R-Marinette), co-chairman of the budget-writing Joint Finance Committee.
“Things that make it more difficult to balance the budget in the future are things that we take note of,” Nygren said.
The current law gives an income tax credit for the property taxes that disabled veterans pay on their primary residences. The credit is refundable, meaning that veterans with no income tax liability will receive a check from the state for the money.
In 2014, the credit was expanded to cover surviving spouses of veterans who died while on duty. The spouses only receive the credit if they don’t remarry.
In 2005, the credit cost about $866,000 to cover 301 veterans, according to the state Department of Revenue. In 2010, the tax credit was issued to just over 5,000 claimants and cost $14.9 million. In 2015, Wisconsin spent $25.3 million to cover 8,730claimants.
The credits average about $2,900 per person, an amount that up until now has stayed fairly constant.
The credit applies to Wisconsin veterans who are considered 100% disabled in connection with their military service and to their surviving spouses. This year, state Rep. André Jacque (RDe Pere) has introduced a bill to lower the disability rating threshold to 70%, making the benefit available to an additional 3,600 people.
The legislation would cost the state and save veterans an additional $5.6 million per year.
Under the proposal, if a veteran is 70% disabled or more, the tax credit that veteran can claim is equal to his or her disability percentage. For example, a veteran with an 80% service-connected disability could claim 80% of the property tax credit.
“We’re honoring our heroes, those who stepped up in service,” Jacque said.
But whether the proposal will gain traction remains unclear because of the cost.
“I have concerns about (the legislation) as far as resources,” Nygren said.
Continual growth
Two factors account for the tax credit growing by millions of dollars.
First, more people are claiming the credit as they become aware of it, according to the state Department of Revenue. Second, the law has been changed since 2005 to allow more people to become eligible for the tax credit.
In 2013, Rep. Dale Kooyenga (R-Brookfield) proposed capping the benefit at $2,500, saying it would save the state money and avoid paying for those who don’t need the state’s help.
Kooyenga, an Iraq War veteran who declined to comment for this story, said then that the current program pays 100% of the property taxes for all claimants, even if they are millionaires.
That proposed cap was estimated to save $18.8 million over two years. The legislation died due to backlash from veterans.
“We’re honoring our heroes, those who stepped up in service.” ANDRÉ JACQUE STATE REPRESENTATIVE