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Thursday, September 15, 2005
Congress Approves First Katrina Tax Relief Bill
Earlier today, the Senate approved by unanimous consent a small tax cut package designed to help those displaced by Hurricane Katrina and also encourage others to continue contributing to the relief effort. The package was announced yesterday by Finance Committee Chairman Charles Grassley (R-IA) and Ranking Member Max Baucus (D-MT) and was scored today by the Joint Committee on Taxation as costing $8 billion.
The House passed a similar tax cut bill this afternoon. The two chamber's versions differ mainly in their handling of charitable giving incentives and in their approach to the Earned Income Tax Credit. The House version ensures families do not lose tax benefits because of temporary relocations; ensures that forgiven debt, such as a mortgage cancellation, is not taxable; provides a $500 per person tax deduction up to $2,000 for taxpayers who temporarily house displaced victims of the hurricane; allows full deductibility for personal casualty losses; waives the 10 percent tax penalty for early withdrawals from retirement plans; extends the Work Opportunity Tax Credit so employers who hire victims of the hurricane can claim a tax credit; lengthens the period of time for replacing damaged property; expands availability of below-market mortgages; and encourages cash donations by individuals and corporations.
Congressional leaders hope the differences can be worked out quickly in conference.
Posted by Adam Hughes
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