Military tax break: Not new, but rare

A proposal to give veterans and National Guard members a break on Minnesota taxes has a small but significant precedent.

By Larry Oakes, Star Tribune

Last update: November 24, 2007 - 7:52 PM

DULUTH - Talk about the few and the proud.

When Gov. Tim Pawlenty proposed an income tax break two weeks ago for 34,000 of the state's military families, he acknowledged that such proposals in Minnesota have a history of failing to pass in the Legislature.

But in 1983, a similar proposal did not fail. Ever since, the state has given an annual property-tax rebate of up to $2,000 to a highly select group of veterans and widowed spouses, as well as free license plates for their cars.

How select? Just two citizens currently benefit: Mike Colalillo of Duluth and Helen Rudolph of Bovey.

Colalillo, 81, is the last living Minnesotan to have been awarded the Medal of Honor. Rudolph, 85, is the widow of Donald Rudolph, a Medal of Honor recipient who died last year at 85 in a Grand Rapids nursing home.

Congress awarded both men the country's highest military decoration for valor -- Rudolph during the World War II invasion of Luzon in the Philippines in February 1945, and Colalillo during a battle near Untergriesheim, Germany, in April of that year. President Harry Truman presented their medals.

Sen. Sam Solon, DFL-Duluth, was among those who sponsored the 1983 legislation to recognize Minnesota's debt to its 46 Medal of Honor recipients, according to Solon's widow and political successor, Sen. Yvonne Prettner Solon.

"He felt they had done such a service to our state and nation that he introduced [the bill] in the Senate," Prettner Solon said.

A 'wonderful' gesture

The state Department of Revenue's Mike Teegardin said the law requires "not a property tax exemption but [rather] a property tax reimbursement of up to $2,000 a year. It also passes along to the spouse or widow. Right now we have two cases of this: one living Medal of Honor recipient and the other a spouse that continues to receive this benefit."

Teegardin said state law doesn't allow him to disclose names, but because Rudolph recently died and Colalillo is the state's only surviving recipient, identifying them was not hard.

"Even though my husband passed away, I can continue to live in this house tax-free, unless it goes over $2,000," Helen Rudolph said.

"We always told each other how much we appreciated what the state had done," Helen Rudolph said.

Colalillo said the benefit came along about the time he retired from his job as a longshoreman. He said he always considered it a "wonderful" gesture, as did his wife, Lina, who died in February.

He said he has never considered himself a hero, though.

"They thought I was a big hero when I came home," Colalillo said. "But I was fighting to save myself and the rest of the crew that was with me. That's all it was."

The citation accompanying his medal says that Colalillo, a private first class, was in a company pinned down by fire from artillery, mortar and machine guns. Rallying his fellow soldiers, he charged the enemy, firing his machine pistol until it was hit by shrapnel and wrecked.

Firing from a tank

He jumped on a tank, manned the machine gun on its turret and took out at least two German machine-gun emplacements before the gun jammed.

With another machine gun supplied by the tank crew, he then jumped down and continued attacking on foot. In all, he killed or wounded 25 of the enemy, then while under fire helped a wounded comrade get back behind American lines.

Unlike the property-tax and license-plate breaks that serve as a "thank you" to Colalillo and Rudolph, Pawlenty's proposal would exempt retired veterans, their survivors and active-duty National Guard members from state income taxes on their military pay and pensions.

The break would say thank you, but it also would help Minnesota compete with the nearly two dozen other states that do likewise, said Durbin Keeney, a Duluth regional director of the Minnesota Assistance Council for Veterans.

"We have states surrounding Minnesota that don't tax [military] retirement funds," Keeney said. "So some people are moving from Minnesota to other states. Often, these are people in their low 40s who are now in other careers.

"If they leave, they're no longer buying houses in Minnesota or working or otherwise helping the economy."

Larry Oakes • 1-218-727-7344

Larry Oakes • loakes@startribune.com

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