History of the Combat Zone Tax Exclusion

Abstract

Exclusion of military pay from federal income taxes has been a long-standing element of U.S. policy on war finance, combat compensation, and revenue collection in combat zones. This paper describes its evolution over time. The Combat Zone Tax Exclusion (CZTE) was originally established to alleviate the burden of war finance from those who fought in the nation's conflicts. During World War (WW)II, combat tax benefits were separated from war finance policy and became an entrenched component of combat compensation. Over time, administrative inefficiency and changes to the tax code have further eroded the tax exclusion's traditional purpose, while generating an unintended inequitable distribution of benefits. At present, the CZTE neither serves its original purpose of exempting service members from the burden of war finance nor its later historical role of selectively rewarding those who face a high level of combat risk.

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Document Details

Document Type
Technical Report
Publication Date
Sep 01, 2011
Accession Number
ADA555281

Entities

People

  • Brandon R. Gould
  • Stanley A. Horowitz

Organizations

  • Institute for Defense Analyses

Tags

Communities of Interest

  • Human Systems

DTIC Thesaurus Topics

  • Civil War
  • Combat Areas
  • Department Of Defense
  • Enlisted Personnel
  • Geography
  • Governments
  • Law
  • Military Personnel
  • National Governments
  • Personnel Management
  • Political Systems
  • Prisoners Of War
  • Revenue
  • Second World War
  • United States Government
  • Vietnam War
  • Warfare

Readers

  • Information Retrieval
  • Maritime Combat Support and Expeditionary Logistics.
  • Military History of the United States in the 20th Century.