NEW DIRECTION FOR ENERGY INDEPENDENCE, NATIONAL SECURITY, AND CONSUMER PROTECTION ACT AND THE RENEWABLE ENERGY AND ENERGY CONSERVATION TAX ACT OF 2007--Continued -- (Senate - April 03, 2008)
BREAK IN TRANSCRIPT
AMENDMENT NO. 4389 TO AMENDMENT NO. 4387
Ms. LANDRIEU. Mr. President, I call up amendment No. 4389 for its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:
The Senator from Louisiana [Ms. LANDRIEU], for herself, Mr. Cochran, Mr. Vitter, and Mr. Wicker, proposes an amendment numbered 4389 to amendment No. 4387.
Ms. LANDRIEU. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
(Purpose: To amend the Internal Revenue Code of 1986 to allow use of amended income tax returns to take into account receipt of certain hurricane-related casualty loss grants by disallowing previously taken casualty loss deductions, and to waive the deadline on the construction of GO Zone property which is eligible for bonus depreciation)
At the end add the following:
TITLE X--HURRICANE-RELATED CASUALTY LOSSES
SEC. X01. USE OF AMENDED INCOME TAX RETURNS TO TAKE INTO ACCOUNT RECEIPT OF CERTAIN HURRICANE-RELATED CASUALTY LOSS GRANTS BY DISALLOWING PREVIOUSLY TAKEN CASUALTY LOSS DEDUCTIONS.
Notwithstanding any other provision of the Internal Revenue Code of 1986, if a taxpayer claims a deduction for any taxable year with respect to a casualty loss to a personal residence (within the meaning of section 121 of such Code) resulting from Hurricane Katrina or Hurricane Rita and in a subsequent taxable year receives a grant under Public Law 109-148, 109-234, or 110-116 as reimbursement for such loss from the State of Louisiana or the State of Mississippi, such taxpayer may elect to file an amended income tax return for the taxable year in which such deduction was allowed and disallow such deduction. If elected, such amended return must be filed not later than the due date for filing the tax return for the taxable year in which the taxpayer receives such reimbursement or the date that is 4 months after the date of the enactment of this Act, whichever is later. Any increase in Federal income tax resulting from such disallowance shall not be subject to any penalty or interest under such Code if such amended return is so filed.
TITLE X--GO ZONE PROPERTY
SEC. X01. WAIVER OF DEADLINE ON CONSTRUCTION OF GO ZONE PROPERTY ELIGIBLE FOR BONUS DEPRECIATION.
(a) In General.--Subparagraph (B) of section 1400N(d)(3) of the Internal Revenue Code of 1986 is amended to read as follows:
``(B) without regard to `and before January 1, 2009' in clause (i) thereof,''.
(b) Effective Date.--The amendment made by this section shall apply to property placed in service after December 31, 2007.
Ms. LANDRIEU. Mr. President, I really appreciate the cooperation of the manager because this is a very important amendment for the gulf coast. It is an amendment I offer with the support of the Senators from Mississippi--Mr. Cochran and Mr. Wicker--as well as Senator Vitter from Louisiana.
We have been waiting for some time now for some housing bill to get to the floor of the Senate where we could offer a small number of amendments that are essential to give aid during the ongoing housing crisis that exists in the gulf today.
I say to the Presiding Officer, as you know, as you remember because you have been down to Louisiana, to New Orleans particularly--and we are very grateful for the support that so many Senators have given--throughout the gulf coast, literally from Mobile to Beaumont, and particularly from Biloxi to Cameron Parish, there is still a tremendous crisis in housing and reconstruction.
I am not going to belabor the point--only to say that I have had Secretary Chertoff on the record as late as 3 weeks ago, Chief Paulson today, the IG of the Homeland Security Committee today in Homeland Security saying the Stafford Act was not intended to handle catastrophic disasters and that FEMA has yet to make any substantial progress in getting ready to handle catastrophic disasters. They have made moderate progress. They have made modest but not substantial progress.
Our people need substantial everything. They needed it yesterday. They need it today. This amendment will help them get a little bit of it now. My amendment basically will allow the people of Mississippi and Louisiana and Texas and Alabama--those who are affected by Katrina, Rita, and Wilma, which was one of the worst seasons of hurricane disaster, in 2005--to basically receive the aid we have already sent to them through the community development block grants. In Louisiana we call it the Road Home Program. These programs were designed at the State level, but they were funded by us. In Mississippi it is called the Mississippi Homeowner Assistance Program. It has literally sent direct lifesaving aid to over 150,000 families in Louisiana and about probably 50,000 to 75,000 in Mississippi. I do not have the Mississippi numbers.
My amendment will help to correct this great injustice that is occurring now. We did not intend for this to occur, but it is going to occur if this amendment or something like this amendment is not adopted.
We sent under a design, basically designed by this Congress, an approximately $150,000 grant to homeowners to help close the gap between what their insurance covered and the total cost of their loss. As I have said many times, homes that were worth $1 million or $2 million were totally destroyed, as well as homes that were worth $50,000.
Many of these homes were not in the flood plain. They were not required to have flood insurance. They were destroyed by the failure of a Federal levee system that collapsed, as well as historic highs of flooding and water coming from Hurricane Rita, which was one of the toughest and most aggressive storms on record.
So the long and short of it is, when we sent this $150,000 grant--we are still in the process of sending it. It has been very slow, very frustrating, and just so aggravating to so many people who are holding on by their fingernails to try to save what equity they had in their homes, which, as you know, for most American families that is their personal wealth. I think 95 percent of all Americans have almost 100 percent of their entire personal wealth tied up in their home. So this issue of helping homeowners in the gulf coast is literally trying to help restore to them a lifetime of work. In some instances, generations of work have been lost in this storm.
Now, we are not making everybody whole. Believe me, there has been enough pain in the gulf coast to go around for a century or more. But what happens is, when they receive their $150,000 grant--and most people have received an average of about $65,000. The authorized level is $150,000, but you have to qualify for that amount. So the average is about $60,000, which sounds like a lot of money, but if your house was worth $500,000, and your insurance has refused to pay you, it is not a whole lot of money to rebuild your house with labor costs that are going up at 20 percent or more since the storm.
So what is happening now is, when they receive these grants--and under the tax law, they can take a casualty deduction. If they did that last year, what happens this year--by April 15, which is in about 2 weeks--for that family who makes $75,000 a year--let's say the Smith family--let's take the Jones and Smith families. They make about the same amount of money. One family this year who took the casualty loss deduction is going to have to pay $24,000 in taxes. The family only makes $75,000, if they are lucky enough to have the job they had before Katrina and Rita struck.
Now, this amendment is not cheap. I make no bones about it. It is about $1 billion. It can be done on an emergency basis. This most certainly is an emergency in housing.
So that is the essence of the amendment. The Finance Committee is well aware of it. We have been talking about it with them for over a year now actually. We have just been waiting for a time to get it fixed.
Now, again, this is an emergency. It is a real problem. It is almost April 15. We have, I would argue, families in America who need the most help on housing.
I feel very sorry for people who are losing their homes in foreclosure, and I am not even going to try to say whether they are suffering more than the people in the gulf south. All I can say is the people in the gulf south didn't take out any adjustable mortgages. The people in the gulf south, most of them had already paid their 30-year mortgage. They own their house scot-free. They paid for it. Now they have lost everything, and we are trying to help them, but in my view, everything we try to do to help them kind of--sometimes it turns out to not help them as much as we would like. There is no textbook. There is no Stafford Act. There is no way to help people who lost everything because of levees that should have held but didn't. We are making it up as we go along, and this is part of my job here to do this. So we have to fix this, and that is what this amendment will do. I am very proud that the Senators from both States have agreed to cosponsor this.
On behalf of Senator Cochran, at his request--and I am happy to support it--there is also a small change in this amendment which will allow this deduction--this goes on the accelerated depreciation piece that we gave to help some of our businesses. We lost 20,000 businesses that weekend. I think Mississippi lost 1,800. That is a lot of businesses to lose over a weekend. To help those businesses and people get back on their feet, this Congress extended to them a way to accelerate their depreciation, but we said: The way to get that accelerated depreciation is you have to start your project by a certain time and finish by a certain time. The problem is, the recovery has been so much slower than everybody anticipated because we have never really gone through this catastrophic situation. Senator Cochran is right when he says we should eliminate the start date. We are not asking for an extension, so technically it really shouldn't add money. We are not asking to extend it to any time or to let a lot of new people come in. But for the same universe, just don't make them start their project the way it said, but let them end it. That is also in my amendment. So we will solve two big problems: We will help our businesses, many small businesses, get the full benefit of what we wanted to give them anyway, actually work for them, and we will make this grant program work for them.
Now, let me be clear. When we pass this amendment, which I hope we will do by unanimous consent or get a large vote on it because I think we really should do it in a bipartisan way, the people to whom we give this tax break--this will lower their rate to their regular rate they will have to pay. They have to go back and reimburse the Treasury for that deduction they took. So, in other words, we are not allowing them to take two benefits. They are going to have to lower their tax this year, eliminate the tax on Road Home, and go back and pay the Federal Government the benefit they took. Their CPAs will have to figure that out. But if we don't do this, there will be people who will be stuck with a tax bill they could not possibly pay, and they shouldn't have to; they have suffered enough.
So I know the Senator from Connecticut, the chairman of the Banking Committee, knows full well what is happening down in the gulf. This is only one thing we are attempting to fix. I have several other amendments I intend to offer, if my colleagues would allow me, at an appropriate time, but this is the amendment I wanted to get in. April 15 is right around the corner, and they need to know what our intention is. This will help so many people. I appreciate it. I will ask for this amendment to be voted on when the first group, however large that group is--2, 5, 6, 10--whenever the first group of amendments is voted on, I would like for this to be included in that group. I ask unanimous consent for that to be the case.