Editorial: Give Sandy victims a federal tax break
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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.
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.