Politics

Congress Looks To Post-Katrina Tax Relief As Model For Harvey

Congressman Kevin Brady, chairman of the House Ways and Means Committee, is spearheading an effort to provide targeted tax relief for victims of Harvey and Irma. The emerging package includes provisions ranging from lifting limits on write offs for property losses to bigger tax credits for the working poor.

Rep. Kevin Brady touring NRG Center shelter with Harris County Judge Ed Emmett, Sen. John Cornyn, and Rep. Ted Poe & in background.

On Labor Day, just about every member of the Houston-area congressional delegation descended on the shelter at NRG Center. One after another, Republicans and Democrats took the podium to pledge massive assistance for Texans devastated by Harvey.

Then came Congressman Kevin Brady’s turn. “In addition to funding help, our communities will need tax help as well,” he said.

Tax help is Brady’s specialty. He chairs the House Ways and Means Committee. Until Harvey struck, his main focus was cutting taxes for high-earners and corporations – popular with Republicans, anything but with Democrats. But Brady struck a different note here: “tax help that I imagine will include lifting the charitable contribution limits, so our businesses and families can continue to give to us as we rebuild in this time of crisis. Finding ways so there is easy access to retirement funds and retirement plans for rebuilding your home.”

There’s a model for Brady’s proposals. After Hurricane Katrina decimated New Orleans, Congress passed the Katrina Emergency Tax Relief Act. It provides a clue for how Harvey tax relief might work in southeast Texas. One of its biggest provisions was to make it easier for people to write off property losses from storm damage.

“In order to get a tax benefit from a casualty loss deduction, the amount of the loss would need to exceed 10 percent of their income,” says IRS spokesman Eric Smith. “So what Congress did for 2005 Hurricane Katrina, Rita and Wilma is to eliminate that threshold.” The Katrina law also helped filers get a refund sooner so they could rebuild.

But economist John Edwards of Tulane University says there was a catch. “If your property is not worth that much,” says Edwards, “then that’s not really going to help you very much.”

That’s a big concern for Congressman Al Green. Nearly a fifth of his constituents in southwest Houston live below the poverty line.

“When these events occur,” says Green, “people who work for wages are hit very hard, especially when they occur to the extent that we experienced here with Harvey.”

Green is co-sponsoring a bill by Austin Congressman Lloyd Doggett, the ranking Democrat on Ways and Means. Doggett’s bill would help low-income workers get bigger, quicker tax refunds via the Earned Income Tax Credit and the Child Tax Credit. It too uses Katrina tax relief as a model.

Kevin Brady says he likes the idea, “so I’ve told Congressman Doggett I’m really eager to work with him.”

Brady also wants to use tax credits to help businesses hire people who lost their jobs because of Harvey, as well as keep people they might otherwise have to lay off because of the storm. Such subsidies, another legacy of the Katrina tax bill, made a big difference to businesses in New Orleans.

“Through this bill, Congress was saying, ‘We want our businesses there to come back. We want them to stabilize. We want them to hire the good people that they had before,’” says Jennifer Bernard-Allen, director of tax services at LaPorte CPAs and Business Advisors.

“Certainly we need to bring businesses back. But we need to think also: who are these businesses going to employ?” says Tulane’s John Edwards. He says this is one area where post-Katrina legislation may provide little guidance. “New Orleans wouldn’t have come back anywhere near as quickly as it did had it not been for the influx of mainly Hispanic undocumented workers.”

Undocumented immigrants were among the Houstonians worst hit by Harvey. Federal, state, and local officials have spent the past three weeks trying to reassure such residents that they can get help and that they won’t be deported if they do. But it’s far from clear how much of the post-Harvey tax relief they’ll ever see.

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Andrew Schneider

Andrew Schneider

Politics and Government Reporter

Andrew heads Houston Public Media’s coverage of national, state, and local elections. He also reports on major policy issues before the Texas delegations in the U.S. House and Senate, as well as the Texas governorship, the state legislature, and county and city governments. Before taking up his current post, Andrew...

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