WASHINGTON, D.C. – U.S. Senator Angus King (I-ME), a member of the Senate Armed Services Committee, today announced his support for legislation authored by Senator Jeanne Shaheen (D-NH) that would safeguard military retirees from changes in cost of living adjustments (COLA) that were included in the bipartisan budget agreement the Senate is expected to pass today. The Military Retirement Restoration Act would replace the estimated $6 billion in expected savings from military retiree cost of living adjustments with an estimated $6.6 billion raised by eliminating a tax loophole for offshore corporations.

“The budget conference agreement will go a long way in helping to provide stability and certainty for our economy, but as with any compromise measure, there are provisions in it that I do not agree with,” Senator King said. “I am particularly concerned with the provision to reduce the annual cost of living adjustment for military retirees of working age. The men and women of our armed forces have earned these benefits through their service to our nation, and we must do all that we can to honor their sacrifice. By reversing the provision approved in the bipartisan budget agreement, and by closing an offshore tax loophole to pay for it, this commonsense legislation will do just that.”

The provision within the Bipartisan Budget Act of 2013 modifies the annual cost of living adjustment for working-age military retirees by making the adjustments equal to inflation minus one percent. The provision would go into effect in December 2015 and is expected to save approximately $6 billion over ten years. 

At age 62, the retired pay would be adjusted as if the COLA had been the full CPI adjustment in all previous years, and the service members would receive the full COLA from then on.

The Military Retirement Restoration Act achieves $6.6 billion in savings by prohibiting companies incorporated offshore but managed and controlled from the United States from claiming foreign status and avoiding U.S. taxes on their foreign income, instead treating them as domestic corporations for tax purposes.

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