September 25,2008

Grassley: House Disaster Relief Tax Bill is ''Measly for the Midwest''

WASHINGTON – Sen. Chuck Grassley of Iowa today said the House of Representatives passed disaster relief tax package shortchanges Iowa and other Midwestern states that suffered floods and tornadoes this spring. Grassley’s version of Midwestern disaster tax relief passed the Senate 93 to 2 earlier this week. The disaster tax relief package is separate from additional federal dollars for disaster recovery that Congress may provide in year-end appropriations legislation.

“The Senate passed a tax relief bill including narrowly targeted help for Iowa and the other states that suffered fatal tornadoes and 500-year floods this spring,” Grassley said. “The House
passed a bill that dilutes and minimizes disaster tax relief over the entire country, over four  years, this year through 2011. That’s measly for the Midwest. It’s like pennies verses dollars. When New York was attacked and New Orleans was under water, Congress dropped everything to offer tailored tax relief packages to help those cities rebuild. Now the Midwest needs the same consideration, and the House leaders are telling us to take what they want to give us, which is nothing more than to put us in line with every other state that had a disaster this year and might have one between now and 2011. It’s insulting to Iowans. We deserve equitable treatment. The House tax relief bill is a lot of nothing for Iowa.”

The House-passed Disaster Tax Relief Act of 2008 (H.R. 7006), authored by Ways and Means Committee Chairman Charles B. Rangel (D-NY) and Committee Member Ron Kind (D-WI), would create a national disaster relief fund that would provide relief to taxpayers affected by federally-declared disasters nationwide, declared after January 1, 2008, and before December 31, 2011. A House press release says that “unlike the Senate-passed disaster relief package, H.R. 7006 would provide every area in the country with equal relief in the event of a federally-declared disaster.” The House disaster tax relief bill includes $8 billion in tax relief, spread out over the entire country, well into the future. Iowa would receive only a small portion of that relief, Grassley said.

The Senate-passed disaster tax relief bill includes a $4.6 billion package exclusively to help Iowa and nine other Midwestern states recover and rebuild from the spring 2008 floods and tornadoes. The bill includes another $3.5 billion for general disaster tax relief for other disasters nationwide, including those in Iowa. It also includes $638 million in tax relief for areas damaged by Hurricane Ike. The tax relief package, which Grassley authored, passed the Senate 93 to 2 as part of a carefully crafted tax bill to extend a series of expiring tax provisions.

“The House is trying to play games with extenders and tax relief,” Grassley said. “The Senate extenders bill was drafted in consultation with House members and includes House members’
priorities. The Senate majority leader’s got it right that the game is over. He said that if the House doesn’t pass the Senate extenders bill, ‘… the full responsibility of this not passing is theirs, not ours.’ Our bill got overwhelming bipartisan support with a 93 to 2 vote. Meanwhile, the House leaders’ disregard for Midwestern disaster victims is shameful. The victims of the  Midwest’s 500-year floods deserve equitable treatment to victims of Sept. 11 and Hurricane Katrina, and the Senate bill provides it. What’s more, the Senate compromise is the only package that the White House has indicated the President will sign. It’s time to focus on making law on these time-sensitive issues. The House can’t ignore the fact that if they approve the Senate package, it will become law. All the other machinations and maneuvers won’t.”

The Senate’s disaster relief tax package is modeled after what was passed for Hurricane Katrina victims three years ago. Grassley has kept the pressure on congressional leaders all summer to take similar action for natural disaster victims in Iowa and throughout the Midwest. In 2005, while Grassley was chairman of the tax-writing committee in the Senate, a major individual tax relief package was signed into law within three weeks of the Katrina disaster. A few months later, Congress followed up with an infrastructure and business relief tax package.

Grassley’s disaster relief tax package was cosponsored this summer by every member of Iowa’s congressional delegation and Republican and Democratic senators from nine other states hard hit this year by severe weather. Original co-sponsors included Illinois Sens. Barack Obama and Richard Durbin.

“Iowans deserve to have every kind of help that Washington can provide,” Grassley said. “The appropriations bill is very valuable, but it treats businesses like an afterthought. Our tax relief
gives businesses the help the need. This translates into real help for small businesses that need every tool they can access in order to rebuild and keep operating after the devastating storms. It lowers their tax liability and puts small business owners in a better position to start turning a profit, keep existing jobs, and create new jobs for Iowans. Small businesses will be able to more quickly write off the demolition and remediation expenses. They will be able to take a tax credit for retaining employees they’d otherwise have to lay off.”

Among other provisions, the legislation would let disaster victims with damage to their primary residence tap their assets and access cash by withdrawing money from retirement plans without tax penalties; suspend limits on tax incentives for charitable contributions, strengthening local and other fundraising drives collecting money to help small businesses and families recover; create tax-credit bond authority to help local governments rebuild infrastructure; increase the amount of tax-exempt bond authority to help businesses receive below-market interest rate financing; remove limitations on deducting casualty losses due to natural disaster; and reduce the 2008 tax burden for small and mid-d businesses by substantially increasing the 2008 deductions for the depreciation and expensing of business property.

Grassley is ranking member and former chairman of the Senate Committee on Finance, with exclusive Senate jurisdiction over tax policy.

A summary of the Senate tax-extenders bill for disaster tax relief can be found in the printer-friendly version of this release.

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