Military retirees may have to pay up to $4.4bn more in tax in 2020 as part of a sweeping plan to fund the government and provide support for those who have retired or have died, according to an Associated Press analysis of government data.
The measure is part of President Donald Trump’s 2018 budget proposal to pay for an additional $1.2 trillion in fiscal year 2020, which ends Sept. 30.
The proposal includes a reduction in Social Security and Medicare benefits for current retirees, a reduction to military pay, and the elimination of an excise tax on military stock.
That would reduce the 2018 budget for the federal government to $1,874.6 billion, according a budget blueprint released by the Department of Defense last month.
The total includes the effects of a $250 tax on any military retirement pay or retirement savings, as well as tax deductions for military members’ medical expenses, pay and benefits received.
The 2018 plan calls for a reduction of $1 billion in Social Safety Net spending for retirees and military dependents, the AP analysis found.
The Trump administration has previously suggested that the increase in military pay would reduce overall spending on other programs.
The Pentagon, which is part-owned by the federal treasury, says it will not be able to keep up with its cost-cutting commitments.
The military pays about 1.5% of the total national income, or about $1 trillion.
The AP analysis shows that as the number of retired service members rises, the federal budget is expected to be $2.9 trillion, or 13.2% of GDP.
The government has been running a deficit since 2020, with the federal debt at $19.5 trillion, more than double what it was in 2007, when the nation was still in the recession.
The Pentagon has been cutting back on spending, including cutting back from the military on research and development, equipment purchases and training.
It has also been cutting salaries and benefits for many of its employees, particularly for enlisted troops.
The budget blueprint also includes a $1 million tax credit to help people with military disabilities and $200,000 to help military spouses who may have retired.
The military said the credit would be paid through the end of 2019.
The Defense Department said in a statement that it would work with Congress to address the needs of those who serve.