Pentagon review recommends changes in combat pay

Posted at 2:11 PM, Jun 23, 2012
By Chris Lawrence 

(CNN) — The days of American troops living on luxurious bases, hanging out at the coffee shop, attending dance parties and still earning full combat pay may be coming to an end.

The Pentagon is considering changes to combat pay that could result in a tiered system, based on how much danger the service member is actually in.

The new recommendations come from an independent review ordered by President Barack Obama in 2010, the Quadrennial Review of Military Compensation.

The review concluded that “the relationship between combat compensation and the degree of danger to which a member is exposed has eroded.” In fact, the reviewers found evidence that troops exposed to the most danger in many cases were receiving the smallest benefit.

“Linking reward to risk is the principal justification for combat compensation,” the review stated.

A major problem with the current combat pay system is its relationship to the IRS tax code.

Service members in combat zones are allowed to exclude income for tax purposes. The report found that junior members, especially those with with families, have little income and pay little in income taxes. Therefore, income exclusion gives them very little benefit.

More senior enlisted troops can exclude their income and receive a greater tax benefit. Officers can exclude nearly $7,800 a month during the time they are deployed to a combat zone.

The report concluded that this exclusion gives the greatest benefit to more highly ranked service members, even though they may be much farther from actual danger than lower-ranking troops.

The report recommends that combat pay be restructured “so that those who are exposed to the greatest danger receive higher compensation, regardless of grade.” It recommends replacing the income exclusion with a tax credit.

The reviewers also recommend increasing “hostile fire pay” so that it surpasses “imminent danger pay.” Both award troops $225 a month, but “hostile fire” indicates an area where troops could be exposed to enemy fire, whereas “imminent danger” is simply presence in a combat zone.

As part of its findings, the report cited a 2011 opinion piece in the Washington Post in which Capt. Michael Cummings wrote, “I didn’t deserve my combat pay.”

Cummings described the living conditions at Victory Base Complex in Iraq, “The water was always warm. The chow hall had a Caesar salad bar, a sandwich bar, an ice cream freezer, and shrimp & steak Fridays. My personal room had a working air conditioning unit and internet connection. VBC hosted multiple PXs, coffee shops and nightly dance parties. I could buy pillows, microwaves, televisions or any video game.”

Defense Department officials are still reviewing the results and have yet to make final decisions on whether to adopt the changes.

Pentagon spokeswoman Eileen Lainez said, “We’ll review the QRMC recommendations. The recommendations do not convey the department’s official position but rather provide alternatives for the department to consider.”

Nations such as Japan, Germany and Australia already have a risk-based tier system of pay.