[StBernard] In Partisan Vote, Senate Blocks Road Home Tax Relief

[Westley Annis]

In Partisan Vote, Senate Blocks Road Home Tax Relief 

 

WASHINGTON - U.S. Senator Mary L. Landrieu, D-La., today commented on the
Senate's largely party-line vote to block legislation that would have
provided significant tax relief to Gulf Coast homeowners and businesses that
invest in the region's economic recovery from the 2005 hurricanes. While the
bill secured a majority in the 50-to-44 vote, Senate procedural rules
required 60 votes for the legislation to move forward. It had passed the
House of Representatives by a 263-to-160 vote last month, and includes
language originally crafted by Sen. Landrieu to relieve many Louisiana
homeowners from having to pay taxes on their Road Home rebuilding grants.

The "Road Home Tax" assistance would  apply to homeowners who took a
casualty loss deduction on their 2005 federal tax returns to account for
damage to their homes following Hurricanes Katrina and Rita. These
homeowners were subsequently required by the Internal Revenue Service (IRS)
to pay income tax on their rebuilding grants. 

 "Road Home grants were never intended to be taxed, and the House of
Representatives acted wisely in voting to protect our families from
bureaucratic obstacles that only add to the difficulties of rebuilding,"
Sen. Landrieu said. "Sadly, the Senate did not follow suit, with some
Senators choosing to protect offshore tax havens and hedge fund profiteering
instead of their own Gulf Coast constituents' fair due. 

"The IRS' interpretation that homeowners should be penalized for following
the IRS' own advice following the storms is simply not fair, and I will not
give up the fight to make it right."

Senate Republicans said they opposed the legislation because it pays for
Road Home and other tax relief measures by closing loopholes that allow
companies to hide profits offshore and hedge fund managers to put off paying
their taxes. Some Republicans also suggested that the bill would hurt
American businesses, even as 300 of the nation's largest companies co-signed
a letter of endorsement calling the plan a "good starting point" for
economic recovery.

The legislation does not increase taxes, nor does it create any new taxes.

 "I have been in close contact with Finance Committee Chairman Max Baucus
and we are working to identify other potential vehicles for passing this
vital tax relief and economic investment incentive," Sen. Landrieu said. "I
strongly urge my Gulf Coast colleagues on both sides of the aisle to cast
aside partisan loyalties and join us in this effort for our constituents."

In April, the Senate passed language by Sen. Landrieu to allow homeowners
who took the 2005 casualty loss deduction to amend their 2005 return by
repaying whatever savings they received with only one year of interest.
Their rebuilding grant income would then be tax-free. The House did not act
on the Senate bill, but instead waived the one year of interest and passed
the legislation now rejected by the Senate today. 

Both the House- and Senate-passed bills also benefit the Gulf Coast by
removing the deadline under which businesses are required to begin
construction of new ventures in hurricane-affected areas in order to benefit
from Gulf Opportunity Zone (GO Zone) bonus depreciation tax benefits.
Currently, only projects that began on December 31, 2007 are eligible for
the tax relief.  Under the Landrieu plan, no commencement deadline would
exist. 

Of the $1.3 billion, the GO Zone extension provides an estimated $308
million in benefits to Gulf Coast businesses and residential development. 

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