Washington – The House approved $6.1 billion in tax breaks Wednesday to help families recover from Hurricane Katrina and to encourage Gulf Coast businesses to reopen their doors, or at least keep employees on the payroll.
The House passed the bill 422-0 and sent it to the Senate, where lawmakers hoped for quick final approval.
Lawmakers intend to follow the immediate aid with a broader package of tax breaks to encourage rebuilding, particularly in New Orleans. President Bush proposed creating a Gulf Opportunity Zone with about $2 billion in special tax breaks encouraging businesses to build or expand in the region.
Congress first responded to the hurricane’s devastating blow by approving more than $62 billion for recovery and rescue. The price tag, expected to increase, has caused wrangling among Republicans over whether to cut government spending elsewhere to defray Katrina’s costs.
The tax breaks passed Wednesday would waive penalties for hurricane victims who want to use money stashed in protected retirement accounts.
Also, families that rely on the child tax credit and the earned income tax credit could protect those benefits throughout job losses, residency changes and family separations caused by Katrina. The bill would let taxpayers use 2004 income to calculate the credits.
Other assistance lets taxpayers recoup more of their unreimbursed and uninsured losses.
Two tax credits encourage Gulf Coast businesses hit by the storm to keep going. One offsets wages paid to employees hired in the region over the next two years. Another helps small businesses hurt by the storm who continue paying their employees through the end of the year.
