Mikota: Reducing tax burden on military retirees a good move for SC

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A bill signed into law by Gov. Nikki Haley in June that reduces the tax burden on military retiree pensions "will encourage working-age veterans to stay in South Carolina or move to South Carolina after they retire from the military," according to Santee-Lynches Council of Governments Director Dr. Michael Mikota. Haley signed the bill June 9. "The legislation signed by Gov. Haley will benefit the Santee-Lynches region for years to come," said Mikota. "With Shaw Air Force Base located in the region, and with Fort Jackson and McEntire Joint National Guard base nearby, Clarendon, Kershaw, Lee and Sumter counties are home to many military personnel and retirees, many of whom form the backbone of the area workforce following their military service. Mikota said that Santee-Lynches Regional Council of Governments worked closely with Clemson University’s Regional Economic Analysis Laboratory and the S.C. Military Base Task Force to study the anticipated economic impacts of the legislation. Using the Regional Economic Models Inc.'s modeling engine, Santee-Lynches and Clemson researchers estimated the economic effects of the tax incentive and developed scenarios based on levels of migration by military retirees. “Santee-Lynches was very proud to partner with Clemson University and the South Carolina Military Base Task Force to provide analytical support for this endeavor," Mikota said. "The long-term economic and quality of life benefits to our region and state from this type of initiative will prove to be substantial as South Carolina strives to cultivate and recruit the most talented and trained workforce in the United States.” It is expected that the increase in disposable personal income resulting from the tax policy will result in a net increase in retired military service personnel locating to the state. The model shows that the net impact on state government revenue is positive within three to seven years following implementation due to growth in economic activity. The more retired military service personnel migrate to the state in response to the policy, the more rapidly net state revenues become positive. The tax benefits for veterans who served 20 years in uniform will phase in over five years. By 2020, military retirees younger than 65 can deduct $17,500 of their income earned in the state. Older retirees can exempt up to $30,000. "The legislation signed by Haley strengthens South Carolina’s existing military retirement pay exemptions, and makes it a valuable incentive to attract skilled workers to start civilian careers with companies in South Carolina," Mikota said. South Carolina is currently one of 24 states with special provisions for taxation of military retirement pay. An additional nine states do not have personal income tax. “This legislation moves our region and South Carolina further along toward the goal of becoming the most military-friendly region and state in the United States,” said Mikota.