Congress passes tax breaks for 2017 hurricane victims
WASHINGTON — Residents across the U.S. Gulf Coast and Caribbean territories hit by Hurricanes Harvey, Irma and Maria this year will get a handful of special disaster tax breaks under a bill passed by Congress and signed by President Donald Trump late last week.
But people in Louisiana with property swamped by devastating floods in 2016 won’t be getting the same deal, despite prior efforts by the state’s congressional delegation to push for similar relief.
The disaster tax relief provisions, tacked onto a six-month extension of the Federal Aviation Administration’s authority to operate and spend money by lawmakers, will make it easier for hurricane victims to write off lost property and income on their taxes.
The new law also lets those affected by the hurricanes to tap retirement accounts without penalties and offers businesses hurt by the disasters tax credits to help keep employees on their payrolls.
The relief, however, is limited only to victims of 2017’s destructive Hurricanes Harvey, Irma and Maria. Hurricane Harvey, which swamped the Houston area with recording-breaking volumes of rain, also caused damage to portions of southwest Louisiana.
Several members of Louisiana’s delegation on Capitol Hill had asked for similar tax breaks in the wake of floods in Louisiana in March and August of 2016 but got nowhere. The exclusion of victims of the 2016 floods in the hurricane tax relief package left several sputtering with anger.
“This is absurd, it is absolutely absurd,” Rep. Garret Graves, R-Baton Rouge, said on the House floor Thursday amid debate on the FAA bill. “We’ve been waiting for 13 months for this exact same tax relief — yet the victims of the other hurricanes get it within weeks.”
“I’d love for someone to explain or justify that to me,” Graves added. “You can’t do it.”
Graves joined Rep. Cedric Richmond, D-New Orleans, Rep. Ralph Abraham, R-Alto, and Rep. Mike Johnson, R-Bossier, in voting against the bill.
“Floods don’t pick their victims, but Congress picked which of those victims got help and which were made to fend for themselves,” said Rep. Ralph Abraham, R-Alto, in a statement Tuesday when asked about his vote. “As Louisianans, we can empathize with hurricane victims in Texas, Florida and Maria. That’s why I previously voted for disaster relief funding. But it is unfair to our residents who lost their homes and businesses to be left out of tax relief efforts when that same relief is being afforded to other flood victims.”
Rep. Steve Scalise, R-Jefferson, who returned to the U.S. Capitol for the first time since being shot in an attack in June just in time to vote on the bill, supported the package, as did Rep. Clay Higgins, R-Port Barre.
“Congressman Scalise supports providing tax relief measures for victims of last year’s devastating floods so that families and communities can fully recovery,” a spokeswoman said in a statement that noted he has worked for more than a year to get federal aid for Louisiana flood victims. “And it’s important that we also do what we can to provide immediate support for the recovery needs of our neighbors in Texas, Florida, and Puerto Rico, not to mention those who were impacted in Southwest Louisiana.”
In addition to reauthorizing the FAA’s operating and spending authority, the package also extends federal funding for several public health initiatives.
Leaving victims of Louisiana’s 2016 floods out of tax relief wasn’t the only item in the FAA reauthorization bill that drew the ire of Louisiana’s congressional delegation. The House of Representatives also attached a bill that would’ve allowed private companies to offer flood insurance to homeowners, something some lawmakers worried would undermine the federally run National Flood Insurance Program if not included in a broader reform.
Sens. Bill Cassidy and John Kennedy, both Louisiana Republicans, stripped the flood insurance provisions from the bill, keeping it out of the final version sent to the White House.
Cassidy and former Sen. David Vitter, R-Metairie, introduced a bill in the U.S. Senate last September that would’ve allowed flood victims to tap retirement funds without penalties.
Graves and former Rep. Charles Boustany, R-Lafayette, each proposed disaster tax relief bills after last year floods in Louisiana that, like the package for hurricane victims signed by the president on Friday, would’ve made it easier to write off disaster losses.
Neither bills gained traction in Congress, with both dying in the House Ways and Means Committee. That committee’s chairman, U.S. Rep. Kevin Brady, R-Texas, whose district was badly hit by Hurricane Harvey, authored the hurricane tax relief bill passed last week.
Political wrangling with a powerful set of lawmakers from New York and New Jersey, as well as the looming deadline at the end of last week to reauthorize the FAA, both played key roles in keeping tax relief for Louisiana flood victims out of the bill.
Several lawmakers from New York and New Jersey complained publicly that victims of 2012’s Hurricane Sandy, which wreaked havoc on parts of the Northeast, weren’t offered tax relief in the aftermath of the storm and weren’t included in last week’s bill.
Retroactively offering the tax relief to Louisianans — either with or without additional relief for Sandy victims — would’ve further complicated touchy political negotiations over the broader bill, according to several congressional sources.
Retroactive tax relief for victims of both Sandy and the Louisiana floods would have significantly increased the cost to the federal government’s coffers of the disaster tax breaks and added serious political complications to last-minute negotiations, the sources said.
But the FAA reauthorization and hurricane tax relief bill may not be the last opportunity to deliver a similar deal for those hit hard by the 2016 Louisiana floods. Graves told The Advocate last week he’d been given assurances the issue would be revisited.
Brady, the House Ways and Means chairman, told The Record newspaper of New Jersey on Monday that he was engaged in ongoing discussions about including expanded tax relief for Sandy victims in a larger disaster aid bill later this year.
Brady, however, is also pushing a Republican framework for an overhaul of U.S. tax law that would eliminate tax deductions for uncompensated disaster losses
One potential opportunity for post-floo
d tax relief could come in a series of disaster aid packages expected to work their way through Congress in the coming weeks.
Senate Majority Leader Mitch McConnell, R-Kentucky, said Tuesday afternoon that he’s expecting the White House to send Congress a request for federal disaster funding for Puerto Rico and the U.S. Virgin Islands — both hit twice, by Hurricanes Irma and Maria, and still reeling from widespread destruction — by the middle of the month.