Death and Taxes

Greyhawk

This might be news, but it's no surprise (hat tip Mrs G):

WASHINGTON ? Soldiers are re-enlisting at rates ahead of the Army's targets, even as overall recruiting is suffering after two years of the Iraq war.

The high re-enlistment rates would make up about one-third of the Army's projected 12,000-troop shortfall in recruiting, although the re-enlistments won't address some key personnel vacancies, such as military police and bomb-disposal experts.

Army officials attribute the strong re-enlistment rates to unprecedented cash bonuses and a renewed sense of purpose in fighting terrorism. Some of the record bonuses are tax-free if soldiers re-enlist while in Afghanistan and Iraq.

Re-enlistment bonuses range from as little as $1,000 to as much as $150,000, depending on the type of job and length of re-enlistment. The $150,000 bonuses are offered only to senior special operations commandos who agree to stay in the military for up to six more years. The average bonus is $10,000, said Col. Debbra Head, who monitors Army retention at the Pentagon.

This is buried a bit farther down:

About 60% of all soldiers who have re-enlisted this year, Conway said, have received cash bonuses of some kind.

So these are the facts: 60% of all soldiers who have re-enlisted this year have received cash bonuses averaging $10,000. Thirty-five percent of Army re-enlistments have come in combat zones - meaning 65% of those receiving bonuses were taxed heavily (combat zone tax exclusions apply to bonuses too). In spite of the well deserved $150,000 bonuses offered only to senior special operations commandos, the best description for any bonus is modest (we'll offer a contrast shortly).

While the USA Today piece points out the non-financial motivations that lead Gis to re-up, watch for future references elsewhere claiming that because of Iraq the Army must rely on large cash bonuses to keep the ranks full.

Here's a similar report:

Military leaders still worry that a record number of overseas deployments are wearing down troops and encouraging too many quality personnel to leave service.

Yet robust reenlistment rates among deployed forces suggest morale is high and troops are never more satisfied than when facing danger.

What explains the paradox?

Tax breaks, most likely.

As career-minded service members rotate through combat zones and hazardous duty areas, including Bosnia, Kosovo, the Persian Gulf and now Afghanistan, they learn to time their reenlistment to take full advantage of tax breaks embedded in such assignments.

For enlisted members and warrant officers, all military compensation paid while assigned there is tax exempt, including reenlistment bonuses.

If something seems unusual about the wording, it's probably because it's from January 2002 - over one year prior to the invasion of Iraq.

*****

Now for that promised comparison:

In the financial section of the newspaper or the business magazine, there is an article about a man, Philip J. Purcell, who has just left a huge financial services company after his performance was deemed subpar, and he's taking home a $113.7 million severance package.

That's from Ben Stein (hat tip: Banter in Atlanter) who goes on to note:

Then I turn from the financial news to the general news section of the paper, or to the barrage of e-mail messages I get from people in the Army and Navy and Marines and Air Force, and I read about men and women who are taking fire from insurgents in Iraq and being blown up by homemade bombs that the Pentagon refers to as improvised explosive devices. The people being blown up are maybe corporals, and they get $1,900 a month, including combat pay.

I appreciate the sentiment, but let's pause and set the record straight. An E4 with four years in service gets 1877 a month in base pay alone. If he's married and living off base he gets another variable amount - for Ft Hood Texas area (chosen at random) that's 775 dollars a month. In those circumstances he also gets 267 a month for meals. (If he's single and in the barracks, he's got free room and board.) Now add in combat pay - 225/month, hazardous duty pay 150/month and for the married guy another 250/month for family separation allowance. And oh-by-the-way free medical for the whole family, free dental for him and low-cost for the family, and tuition for off duty education. He may qualify for other allowances too. And if he goes career you can toss in a pension plan with no contribution from the soldier. This leaves a not bad for a high school graduate amount of disposable income - nowhere near the 113 million for Philip J. Purcell, but not quite as small as the number Mr. Stein is touting. His point is still valid, and appreciated - there's a real disparity between the two compensation packages, and he's correct in noting the application of the same to police, fire, and other deserving folks in service to their nation and community. But it really is time to end the comparison of military pay to fry chefs at McDonalds too.

You can look closer at the numbers here.

By the way, I don't want anyone anywhere paying higher taxes so I can get a pay raise.

As Ben Stein notes, Purcell's job has already been filled. But those so inclined can enlist here: Army Navy Air Force Marines - but please, remember - if too many of you do they'll take away the bonuses!