Senate Rushes to Address Katrina Relief

The Senate this week may rush through a Katrina tax-relief package. For individuals, the package would exempt taxes on debt that is forgiven and waive the penalty tax on early retirement-plan withdrawals. Other incentives include a tax credit to encourage employers to hire Katrina evacuees, and for companies in the disaster zone to temporarily retain evacuees on their payroll. For people who house evacuees, the legislation would provide an additional $500 personal exemption for every dislocated person not already included on a taxpayer's return. A slew of other provisions would encourage donations of books, food and cash. The Senate might consider two other hurricane-related bills this week to adjust federal flood insurance and welfare laws. Both measures have cleared the House. The tax package's total cost could run between $3 billion and $7 billion, early estimates show. The benefits would be temporary, with most expiring at the end of this year. The House Ways and Means Committee will consider its own slate of hurricane-related tax relief, but aides cautioned that the House's priorities could differ somewhat. In a bipartisan statement issued Friday, Ways and Means members said that in coming weeks they would look at tax relief for individuals along with changes to unemployment, child support and foster care laws. Future legislation would address rebuilding incentives similar to the New York City revitalization efforts after the Sept. 11, 2001, terrorist attacks, the statement said. size="-1"> For the href="http://finance.senate.gov/press/Gpress/2005/prg091205.pdf">press release For a href="http://finance.senate.gov/press/Gpress/2005/prg091205a.pdf">summary of the legislation
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