Spouses of fallen service members lobby to eliminate "widow's tax"

Military spouses seek to repeal "widow's tax"

When Traci Voelke's husband, Army Major Paul Voelke, was killed in action seven years ago, she not only had to deal with losing her spouse – she also had to worry about her family's financial future. 

"There's an archaic rule on the books that [says], if you get money from the VA, that money offsets any money that's paid by the Department of Defense," she said.

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Traci Voelke, widow of Army Major Paul Voelke. CBS News

A widow can get roughly $1,300 a month tax-free from a compensation fund run by the VA if they agree not to hold the government responsible for their spouse's death.

Some also get a payment from a Defense Department survivors' benefit plan into which their deceased spouse had paid.

But the 1972 law that launched the Pentagon program blocks some of these families from collecting from both funds.

Instead, for every dollar a spouse gets from the VA, they lose a dollar of survivor benefits from the Pentagon.

That's become known as the "widow's tax."

Voelke said she's missed out on $1,300 every month, for seven years. That's over $100,000. "I think part of the reason why my husband served was he knew that if something were to happen, we would be taken care of," she told correspondent Ed O'Keefe.

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Senator Susan Collins (R-Me.) and Doug Jones (D-Ala.). CBS News

Now, Senators Doug Jones, a Democrat from Alabama, and Susan Collins, a Republican from Maine, are leading a bipartisan campaign to fix the problem. More than 70 senators support the plan. Hundreds of Members of the House back a similar idea.

"This is a case of tremendous unfairness," said Collins. "We have an obligation not only to the service members, but to their families."

Jones said, "People have talked to us and they have expressed that anger. And they are right – they should be angry."

Cathy Milford, who lost her husband more than 25 years ago, has been dealing with the widow's tax ever since. Three years ago she decided to lobby Congress directly.

"It's very difficult for me because I have to keep telling about 'My husband died, my husband died, my husband died.' And yet I would rather talk about our life together, rather than talking about his death,' Milford said.

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Military widow Cathy Milford (with correspondent Ed O'Keefe) has been lobbying Congress to end the so-called "widow's tax." CBS News

After so many years, the current fight to fix the problem might just be paying off.

Voelke said, "I'm hoping this Memorial Day that people call their congressmen, and the people at the DOD can kind of listen to our stories and see that we're not just a bill you have to pay. This is the cost of war, and this is what our families are owed."

The Pentagon tells us that eliminating the so-called tax would cost approximately $6 billion a year.

But with some other fixes being made to cut taxes on benefits paid to the children of fallen service members that was exposed by recent changes in tax law, Congress seems eager to also fix this problem that's lingered far longer.