Iowa Lawmakers Seek Federal Tax Relief for Flood and Tornado Victims

Press Release

IOWA LAWMAKERS SEEK FEDERAL TAX RELIEF FOR FLOOD AND TORNADO VICTIMS

A comprehensive plan to provide $3.96 billion in federal tax relief to flood and tornado victims in Iowa and other Midwestern states was introduced today in the U.S. Senate by Chuck Grassley and Tom Harkin and the U.S. House of Representatives by Dave Loebsack, Tom Latham, Leonard Boswell, Bruce Braley and Steve King.

The "Midwestern Disaster Tax Relief Act of 2008" is modeled after tax legislation that Congress passed to help victims of Hurricanes Katrina, Rita and Wilma in 2005 and the tornado in Kiowa County, Kansas in 2007. Sponsors of the new legislation urged the House and Senate to act quickly.

"Federal tax relief has proven to be very helpful to disaster recovery efforts in recent years. This summer, devastating natural disasters hit Iowa and other parts of the Midwest, so now it's time for Congress to pass tax relief legislation for the Midwest. I was Chairman of the Finance Committee after Hurricane Katrina. Lawmakers acted quickly for victims along the Gulf Coast. In 2005, a major individual tax relief package was signed by the President within three weeks of the Katrina disaster. A few weeks later, Congress followed up with an infrastructure and business tax relief package. Congress appropriated $60 billion in emergency funds within a week of the storm and much more followed. This year, we're seeking the same consideration for Midwestern disaster victims," Grassley said. "After learning lessons from 9-11, Katrina and other disaster packages, we've tailored this year's package to the needs of this major natural disaster."

"Iowans are picking up the pieces after enduring one of the most brutal floods in our state's history," said Harkin. "After a disaster of this magnitude, Iowans deserve strong federal support. This tax relief will go a long way toward helping families, businesses and non-profits recover and rebuild after the disaster."

"Thousands of Midwesterners are struggling to get back on their feet following the devastating floods last month, and we must do everything possible to spur investments necessary for a robust and swift recovery," said Loebsack. "This comprehensive tax assistance package provides individuals and businesses with peace of mind to rebuild, and communities with the support necessary to recover from this disaster."

"The magnitude of the devastation and loss of these floods is staggering. This legislation is an important bipartisan solution that further assists Iowans and businesses to can get back on their feet and keep moving forward," Latham said.

"This tax relief package is crucial in helping Iowans rebuild their communities. It is my hope that Congress will soon act on this bipartisan legislation," Boswell said.

"Iowa's homes, businesses and livelihoods were all impacted by the unprecedented damage caused by the Floods of 2008," Braley said. "Our legislation will help Iowans continue down the road to recovery. By providing needed tax relief we can help rebuild Iowa's communities."

"Iowans have responded to the disasters as Iowans always do, by helping each other pick up, clean up, and move on. Iowans are doing our part, and this tax relief package gives us more tools to continue rebuilding. This tax relief will help get Iowa back on its feet and supplements the boots already on the ground and the funds already spent to help us recover," King said.

Ten states were affected by this severe weather system. In Iowa alone 340 communities were affected by these tornadoes, storms, and flooding. According to initial estimates provided by the Governor's office, Iowa suffered more than $10 billion in damages. Of this amount approximately $4 billion was agriculture loss, $4 billion was business loss, and $1 billion was housing damages and destruction.

Individuals and businesses located in presidentially declared disaster areas due to floods, tornados and severe storms in Iowa, Arkansas, Illinois, Indiana, Kansas, Michigan, Minnesota, Missouri, Nebraska and Wisconsin would be eligible for the Midwestern Tax Relief Act of 2008.

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-sized businesses by substantially increasing the 2008 deductions for the depreciation and expensing of business property.

BREAK IN TRANSCRIPT