Democrats criticized a Republican-crafted disaster tax relief package Monday for providing victims of Hurricanes Harvey, Irma and Maria with benefits that were not approved after Superstorm Sandy in 2012.
The opposition kept the bill, which was introduced Friday and brought up under a special procedure, from getting the needed two-thirds majority needed for passage as an emergency item. Another vote, using a procedure that only requires a majority, is expected later this week.
Rep. Carlos Curbelo, a Florida Republican whose district includes the Keys, urged his colleagues during debate Monday afternoon to approve the bill quickly because people hit by the storms need help.
“They don’t have time to wait,” Curbelo said. “They certainly don’t have time to play political games.”
But Rep. Bill Pascrell, D-N.J., said Congress took three months to consider an aid package after Sandy and then never even debated a package of tax breaks he proposed that was similar to one enacted after Hurricane Katrina devastated the Gulf Coast in 2005.
“Congress until then had routinely provided tax relief to communities in the wake of the worst storms,” Pascrell said. “Victims of Hurricane Sandy did not receive the same treatment. … This whole debate smacks of a certain hypocrisy.”
House Minority Leader Nancy Pelosi, D-Calif., said in a statement early Monday that the tax provisions "don’t treat all families recovering from natural disasters the same."
House Ways and Means Chairman Kevin Brady, R-Texas, introduced a bill Friday that combined a handful of disaster-related tax breaks with an extension of funding for the Federal Aviation Administration, which is due to expire at the end of the week. The bill also includes a section to increase the private-sector involvement in providing flood insurance, which currently is provided almost exclusively by the Federal Emergency Management Agency.
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Brady indicated the decision on Sandy could change in a future bill.
"This provision, it is not the final recovery package," Brady said. "We were given the opportunity to accelerate the immediate needs for Harvey and Irma and Maria because the victims right now are struggling, they need the immediate help."
Asked whether Sandy victims could ultimately be included in a future bill, Brady said, "We’re going to continue that conversation."
Brady's bill would provide victims of Harvey, Irma and Maria in regions where President Trump has issued a disaster declaration with tax benefits for:
Casualty losses: Currently, taxpayers can deduct losses from their income taxes if they exceed 10% of adjusted gross income, and the taxpayer itemizes. Both of those requirements would be eliminated in the bill, so designated storm victims could write off all their losses, regardless of whether they itemize.
Retirement withdrawals: The bill would lift the 10% penalty on withdrawing funds from many retirement accounts, including IRAs, to pay for disaster recovery. It also would provide more flexibility for borrowing from accounts.
Expanded charitable deductions: The current limit on deducting charitable contributions — taxpayers generally can only deduct 50% of their income — would be lifted for donations to hurricane relief, so people making large gifts could write more of them off. It would also change rules for applying large write-offs to multiple years of tax returns.
Employment relief: A tax credit would be provided of 40% of wages, up to $6,000 per employee for a disaster-affected employer from a core disaster area.
Special rules: Taxpayers could use income from last year to determine whether they are eligible for the Earned Income Tax Credit or Child Tax Credit.
The legislation would also extend authorization of the FAA and its funding, which is now slated to expire Saturday, until March 31.
FAA functions such as air-traffic control, which guides planes across the skies, are considered essential services and have continued to operate during previous funding lapses. But the risk to the government is an inability to collect taxes on tickets that airlines sell, which fund the system.
Lawmakers complained that when a two-week lapse occurred in 2011, most airlines continued charging the same fares without passing along tax savings that can total about one-fifth of the average ticket price to passengers.
Contributing: Bart Jansen