Tax Breaks for Katrina May Aid Rich More

WASHINGTON -- House and Senate tax writers agreed Tuesday on a package of tax breaks designed to help Hurricane Katrina victims recoup their losses and access needed cash, The Associated Press reported.

The bill helps Katrina victims access their savings by waiving penalties imposed for tapping retirement savings accounts before retirement. Other provisions let taxpayers write off more of their destroyed property and erase taxes regularly imposed when a debt, like a mortgage, is forgiven.

The bill, which lawmakers expect to pass quickly, will include a two-year tax credit for businesses hiring people within the disaster area. Those who take in evacuees, other than family members, would be eligible for a $500 personal exemption.

The Congressional Research Service report said some elements of the tax assistance would do more for wealthier taxpayers because many lower income individuals and families pay little tax. Lower income survivors are also less likely to have retirement accounts like 401(k)s and IRAs.

However, the same tax measure includes assistance specifically for lower-income families that would help the working poor hang onto their income tax credits, which can be disrupted by unemployment or family separation.

-- NYSSCPA.org News Staff

Posted on 9/21/05