Pockets and Payrolls
One month after Katrina, getting more cash flow into pockets and payrolls is critical to Mississippi’s reconstruction and eventual revival. The best way government can help is by enacting policies specifically tailored to help spur local governments, businesses and individuals’ cash flow.
“The GO Zone”: President Bush made a bold proposal by introducing the Gulf Opportunity Zone or “GO Zone.” This initiative would make the hardest hit swaths of Mississippi, Louisiana and Alabama eligible for special tax incentives designed to encourage the reopening of businesses and even the relocation of more businesses to our area. Even before the hurricane, South Mississippi was proving very attractive for new industries. So the GO Zone could give us an even greater advantage in the competition for new jobs.
In a recent Senate Finance Committee hearing about Mississippi’s recovery from Katrina, I suggested that the GO Zone be expanded even further. For instance, the President’s plan increases from $100,000 to $200,000 the limit on small business expensing for investments and equipment, but I’ve suggested that we remove this limit entirely, making this incentive available for all businesses, large and small alike.
We also should eliminate capital gains taxes for “GO Zone” investments, authorize more tax-exempt bonds and allow for additional advanced refunding of outstanding debt. These actions primarily would help local governments, some of which were wiped out financially and physically.
State Tax Savings: For Mississippi specifically, I’ve worked within the Senate Finance Committee to secure a 100 percent federal reimbursement for Mississippi’s medicaid program. I normally don’t advocate expansion of the medicaid rolls, but we know what a tough time state officials charged with administering this program have had even before the disaster in trying to make it balance. This reimbursement will take pressure off our governor and Legislature at a time when they most need it, and it will ensure that truly needy citizens aren’t left without health benefits at this difficult time. Not an indefinite entitlement, this limited benefit would expire after 2006.
We also have provisions in the medicaid bill to continue private health care coverage for Katrina’s victims. Under a new disaster relief fund, individuals who have lost their jobs but want to continue their job-based coverage will be eligible for premium assistance.
Most Americans, myself included, aren’t interested in a huge expansion of government programs to people not impacted by Katrina, and we don’t want people in these programs to stay on indefinitely. We want only to address their immediate needs. The time limit ensures that taxpayers won’t be stuck with long-term bills while ensuring that states like Mississippi will be fully compensated for costs they incur in providing medicaid to evacuees. In fact, it actually helps control the medicaid rolls by enabling individuals to keep their private insurance.
Individual Relief and Incentives: Tax incentives targeted more toward individuals is another proposal I’ve help craft in the Finance Committee. This bill is designed to encourage donations and shield Katrina’s victims from looming IRS deadlines. It contains a $500 tax credit to persons housing evacuees for 60 days or more; extends IRS deadlines for victims while protecting them from unreasonable penalties; provides for early withdrawals from retirement savings; and contains incentives specifically designed to encourage donations of food and other needed relief supplies.
My committee also is working on ways to address the critical insurance question along the coast. Many coast residents living far outside flood zones and without flood insurance saw their homes washed away by Katrina’s storm surge. Our entire recovery could hinge on how we address this insurance adjustment question. I’ll have more to report on that later, because it, too, is part of helping Katrina’s victims. Getting cash into storm victims’ pockets and payrolls – whether through tax relief or insurance checks – is essential to Mississippi’s recovery.
Senator Lott welcomes any questions or comments about this column. Write to: U.S. Senator Trent Lott, 487 Russell Senate Office Building, Washington, D.C. 20510 (Attn: Press Office)