Released just two days after Halloween, the tax bill proposed by House Republicans was said to be filled with money-saving treats for middle-class Americans. But in realty, it’s loaded with tricks for residents of blue states like California, the dirtiest one being the elimination of deductions for personal casualty losses from disasters such as wildfires.
This comes as residents of our area are reeling from the effects of the most costly wildfire in the state’s history, one that destroyed roughly 6,700 homes — 2,900 of them in Santa Rosa alone — killed 43 people and resulted in total damages of about $3 billion.
The deduction for losses from wildfires, earthquakes and other disasters is one of many tax breaks that are spiked in this tax reform package in order to help offset significant cuts in tax rates for corporations, businesses and some individuals.
But there are exceptions in the legislation. For example, losses from Hurricanes Harvey, Irma and Maria, which caused heavy damage in red states such as Florida and Texas, are grandfathered in, meaning residents of those areas will still be able to take advantage of these deductions. It so happens that the chairman of the House Ways and Means Committee is Rep. Kevin Brady, R-Texas, whose handwriting is all over this tax plan. He represents a district north of Houston that was devastated by Hurricane Harvey.
This led to a dramatic confrontation between Rep. Mike Thompson, D-St. Helena, a member of the committee, and Brady during a House Ways and Means meeting on Monday.
“Mr. Chairman, why would you have done that?” Thompson asked. “Why would you take away the ability for working-class people who lose their homes in disasters from being able to get a little help from the tax code. And to add insult to injury, you grandfather in the hurricane folks.”
Brady said he would address the issue as they responded to each provision of the bill. ”There are many of them,” he said. “And I know you are passionate about that (one).”
“I am passionate,” Thompson said, at one point slapping his palm on the dais. “I have 9,000 people in my district who had their homes burned to the ground. Their lives are changed. The communities in which they lived are changed. And you are pulling the rug right out from underneath them.” He went on to call the move both “cruel” and “heartless.”
We might add a few other choice adjectives, including specious and unnecessary.
Defenders of the tax plan note that the eliminations wouldn’t take effect until next year, so victims of the North Bay fires would still be eligible for the deduction this year. That’s true, as long as they scramble to figure out all of their uninsured losses and make sure they’re tabulated correctly on their 2017 tax returns.
Residents who have lost homes have enough on their plate without having to worry about taking advantage of a deduction — one that’s being eliminated to make room for deep tax cuts for large businesses and the ultra rich. And to help people in states that really matter, like Texas.