AFSA's Efforts to Exempt Foreign Service Retirement Income
from Maryland State Taxation

BACKGROUND:

At the start of the 2005 Session of the Maryland General Assembly, both the Speaker of the House and the President of the Senate, at the behest of Governor Robert L. Ehrlich Jr., introduced legislation to exempt military retirement income from state taxation. House Bill 245 and Senate Bill 211 were the fruition of ongoing efforts by the Ehrlich administration to make Maryland a more veteran friendly state that would attract more military retirees, whom the administration considers to be highly trained personnel who are essential to the economic growth of Maryland . AFSA believes Foreign Service retirees are just as essential as their military colleagues and deserve the same benefits.

House Bill 245 is co-sponsored by 66 delegates and Senate Bill 211 is co-sponsored by 21 senators. Both bills are currently being considered by the House Ways and Means Committee and Senate Budget and Taxation Committee, respectively, which need to report the bills to the floor of each chamber.

Currently, the bills only allow military retirees with 20 years of active-duty service to exempt 100 percent of their military retirement income. Language in the legislation provides for a gradual phase-in over a five-year period of this exemption. Therefore, 20 percent of military retirement income would be exempt in 2006, 40 percent in 2007, etc.

AFSA's GOALS:

1. AFSA seeks to amend both House Bill 245 and Senate Bill 211 to include retired members of the U.S. Foreign Service. This would require developing support of the legislators to include Foreign Service annuitants; in particular, we need to identify a delegate or a senator, preferably on the relevant committees, to amend the bill in each chamber to include Foreign Service annuitants.
   
   
2. Once amended, AFSA will work to support passage of the legislation.

TALKING POINTS:

• The Foreign Service is a small, unique cadre of federal employees dedicated to protecting and advancing the interests of the United States at over 250 posts abroad.
  
  
• Most of the 1,600 Foreign Service retirees residing in Maryland spent two-thirds of their careers overseas, all the while maintaining a residence in Maryland and paying state income tax.
  
  
• Because of their skills, language abilities, and the fact that they usually start second careers after retiring, Foreign Service retirees constitute a small but essential part of the state economy.
  
  
• Would you be willing to offer an amendment to include Foreign Service retirees in House Bill 245/Senate Bill 211? Can we count on your support?