Monday, October 20, 2008

Bailing Out the Bailout

Posted By on Mon, Oct 20, 2008 at 2:33 PM

?Lost in the controversial bill tossing a $700 billion life preserver to Wall Street was a significantly smaller provision that could help flood and hurricane victims stay afloat during their own recovery. The new federal law allows Louisiana families who suffered property damage from hurricanes Gustav and Ike, as well victims from the recent flooding in the Midwest, to claim thousands of dollars more in deductions on their taxes.

 The break, included by the Senate, changes the way the casualty-loss tax formula is applied to the current year. It’s a silver lining to an otherwise tough vote for Rep. Charlie Melancon, a Napoleonville Democrat. According to a Rasmussen Reports poll, 44 percent of Americans opposed the bailout. Back home in Louisiana, editorial writers chastised the proposal as corporate welfare, and constituents sounded off on talk radio about what was in it for them. Lawmakers on the Hill referred to it as a “legacy vote” as many who face re-election — Melancon is unopposed this year — opposed the measure.

??Louisiana’s congressional delegation was split. Faced with the reality that the nation’s financial markets are broken and possibly dragging the country into a recession, Melancon, who bills himself as a fiscally conservative Blue Dog Democrat, says he had no choice but to support the package. “This rescue called for a hefty investment from all of us, but it only earned my vote when significant steps were taken to guarantee taxpayers weren’t stuck with the bill,” Melancon says. He adds that he was swayed by the support included for hurricane victims, especially in light of the out-of-pocket costs some of his constituents are facing. In particular, coastal residents have been shocked to find a special hurricane deductible on their policies that is a percentage of a home’s insured value, rather than the traditional deductible of $500 or $1,000. “If you lost a roof during Gustav, chances are you’re faced with a very big repair cost and very little help from your insurance company,” Melancon says. “This tax change will help a lot of folks in this situation recoup a few thousand dollars at tax time.”

??Previously, taxpayers would only be able to claim damage that exceeded 10 percent of their adjusted gross income — minus $100. Under the National Disaster Relief section of the Emergency Economic Stabilization Act, they will now be able to claim all the damage that exceeds $500, with no consideration of adjusted gross income. — Jeremy Alford

 

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