Congress fails to reach pre-Memorial Day tax fix for Gold Star families

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Congress fails to reach pre-Memorial Day tax fix for Gold Star families
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It's a tale as old as Washington: Senate passes bill. House passes different version of bill, wrapped into a larger, unrelated bill. One frustrated senator stops it from going to the President's desk.

That's what happened this week when Congress tried to resolve a wrinkle in the Republican tax law that resulted in thousands of Gold Star families getting hit with unexpected tax bills this year. Lawmakers in both parties called for passing a fix before Memorial Day. Instead, they will have to wait until after their upcoming recess, thanks to House Democrats' decision to fold it into a larger retirement measure that drew opposition from Sen. Ted Cruz.

That change in the 2017 Republican tax bill was intended to simplify how the tax code deals with unearned child income, such as estates and trusts.Prior to the tax bill, a Defense Department benefit that spouses of fallen service members often designate to their children was taxed at the parent's rate, which was on average about 12 to 15%, according to the Tragedy Assistance Program for Survivors. This year, some families instead had to pay rates of up to 37%.

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