Welcome to GulfCoastNews.com
 

Lott Joins President Bush at White House for Signing of Senator Lott’s Katrina Tax Incentive Bill
– ‘GO Zone’ to benefit workers, help municipalities and enhance housing supply –

From Office of Sen. Trent Lott     12/21/05   GCN

 U.S. Senator Trent Lott of Mississippi joined President Bush at the White House Wednesday as the President signed into law the Gulf Opportunity Zone Act to benefit 40 of Mississippi’s counties hardest hit by Hurricane Katrina. 

“The new law makes businesses throughout the hurricane-stricken zone eligible for many  tax incentives designed to encourage businesses to reinvest in facilities and rehire Mississippi workers,” Senator Lott said.  “It helps our cities restructure their debt and increase the coast’s housing supply.”

“By signing this bill into law, the President has taken an important step to help the victims of Hurricane Katrina,” Senator Lott said.  “Getting Mississippians back into steady jobs is one of the best thing we can do to help them begin rebuilding their lives.”

On Friday, December 16th, the Senate passed the tax bill, which includes almost $6 billion in tax cuts and incentives for Katrina-impacted counties in states hardest hit by Katrina.  Senator Lott, a senior member of the Senate Finance Committee, wrote most of the bill’s provisions.

The law contains more than a dozen Katrina-related tax incentives for the Gulf Opportunity (GO) Zone, defined as that portion of the Katrina disaster area determined by President Bush to warrant individual assistance from the federal government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act.

“In the coming months, I know these provisions will provide a firm foundation for economic recovery throughout the Gulf region,” Senator Lott said.

The new law allows businesses temporary relief from some taxation and regulations to re-establish their places of employment.  It lowers the cost of capital for small, medium, and large businesses alike in order to spur business investment on the Mississippi coast. For example, businesses in the first year are permitted to expense 50 percent of the cost of new equipment, in addition to some commercial and residential rental real estate expenditures.

Senator Lott said that one provision in particular focuses on helping small businesses in the disaster zone.  Small businesses can deduct up to $200,000 of the cost of property used in their enterprises and increase their level of investment, allowing more small businesses to use this benefit in rebuilding.  

The Katrina tax cut law increases by $4.8 billion the amount of tax exempt bonds Mississippi can allocate in the GO Zone through 2010,and allows an additional advanced refunding for all bonds issued prior to 2007 within the GO Zone by the State of Mississippi and by all local bond issuers.  This provision effectively allows cash-strapped localities to restructure their debt, delaying payments on principal and interest while their tax base is re-established.

Senator Lott said the law provides $1 billion in New Markets Tax Credits for companies investing in Mississippi businesses and construction.  To infuse businesses that have lost revenue with cash, it allows out a net operating loss carryback for businesses, public utilities and small timber growers in the GO Zone for new investment and repair, business casualty losses, and moving and temporary housing expenses.

Under the law, 50 percent of demolition and cleanup costs is deductible by businesses.  The bill doubles reforestation expensing to $20,000.

Senator Lott said the new law provides a 40 percent employee retention credit for wages paid up to $6,000 after August 28, 2005, and before December 31, 2005.  That provision incentivizes businesses that have had to close temporarily, to continue to employ Mississippians until reopening.  The credit, which already applied to small employers, now covers all employers, Senator Lott said.

Finally the law includes significant incentives to ensure an adequate housing supply.  Under one provision, funding for low income housing is increased by allowing Mississippi to allocate volumes of additional housing credit amounts, three times the normal allocation, with respect to population for the years 2006 to 2009. 

The new law also provides Mississippians greater access to mortgage revenue bonds which are tax-exempt bonds that state and local governments generally issue through housing finance agencies.  The proceeds from the bonds are used to fund below-market interest rate mortgages for certain first-time homebuyers who meet income and purchase price restrictions.

The newly-signed law lifts the first-time homeowner requirement and allows up to $150,000 in mortgage revenue bond proceeds to be used for repairs through December 31, 2010.  The law also relaxes the income and purchase price restrictions with respect to mortgage revenue bonds funded with the proposal’s Katrina GO Zone bonds.

Welcome to GulfCoastNews.com