Editorial
Editorial: Give Sandy victims a federal tax break
Photo credit: Howard Schnapp | Discarded items damaged by superstorm Sandy sit on Illinois Avenue in Long Beach. City officials released a statement Nov. 14 saying an evacuation order for the area has been rescinded. (Nov. 7, 2012)
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Viewsday: Analysis and opinion
People slammed by superstorm Sandy could use a tax break.
Individuals whose homes were damaged and the owners of businesses left inoperable need all the help they can get to rebuild. Legislation proposed by Sens. Charles Schumer (D-N.Y.) and Robert Menendez (D-N.J.) would provide a timely, targeted assist. Congress should pass it.
The bill would allow individuals and businesses to deduct out-of-pocket cleanup costs when filing their federal taxes. And the 10-percent penalty for withdrawing money from retirement accounts would be waived if the money is used to cover storm-related expenses. Businesses would be allowed to accelerate depreciation for business equipment. And they'd get a worker retention tax credit if they continued to pay employees while their business was closed due to storm damage.
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The bill would also allow those who sheltered people displaced by the storm free of charge for at least 60 days to claim a personal exemption. But that provision could be abused and should be reconsidered.
The breaks would be available to people hit by Sandy and any other FEMA-declared major disaster in 2012. The cost to the federal government in forgone tax revenue isn't clear, but the price tag for a similar package approved in 2005 for the victims of Hurricane Katrina was $6 billion.
The road to passage, however, could be bumpy.
Ideally Congress will take up the bill separately from the $60 billion in emergency spending President Barack Obama requested last week to fund recovery efforts in Sandy-ravaged states.
Consideration of the Schumer, Menendez bill is also complicated by ongoing negotiations between congressional Republicans and the White House to avoid the "fiscal cliff" of about $600 billion in automatic tax hikes and spending cuts scheduled to take effect Jan. 1.
But the need for long-term deficit reduction shouldn't harden Washington to the immediate need in Sandy's wake.
