Rep. Mike Thompson and Napa County leaders fear that people who lost homes in the recent wildfires could take a hit from federal income tax reform being debated in Congress.
The House of Representatives is discussing the Republican-proposed Tax Cuts and Jobs Act of 2018. Among the possible provisions is to stop allowing property owners to deduct uninsured and underinsured wildfire losses from their federal income taxes, a county report said.
Napa County lost more than 500 homes in the recent Atlas, Tubbs and Nuns fires that broke out on Oct. 8. and menaced the community for about two weeks. Neighboring Sonoma County lost thousands of homes.
Thompson, D-St. Helena, brought up the proposed disaster deduction repeal issue Monday at a hearing of the House Ways and Means Committee on which he sits. He entered into a sharp exchange with Rep. Kevin Brady of Texas, the Republican chairman of the committee.
“Mr. Chairman, why would you have done that?” Thompson said. “Why would you take away the ability for working-class people who lose their homes in a disaster from being able to get a little help from the tax code?”
To add insult to injury, the bill would allow the disaster deductions for survivors of hurricanes Harvey, Irma and Maria, but not for California wildfire survivors, Thompson said.
“Why would you have done that?” Thompson said.
Brady said the committee would take up each provision of the proposed tax reform bill later. He added that he knows Thompson is passionate about the wildfire issue.
“Mr. Chairman, I am passionate,” Thompson said, softly hitting the dais for emphasis. “I’ve got 9,000 people who had their homes burned to the ground. Their lives are changed. The communities in which they live are changed, and you’re pulling the rug right out from beneath them.”
Brady said he has a number of families in his state that also lost their homes, referring to Hurricane Harvey’s effects on Houston and other communities.
“You took care of them,” Thompson said. “You grandfathered them in.”
Brady said Congress acted in a bipartisan way to provide tax relief for the hurricane survivors. He expects another package to come forward for the wildfires and he intends to seek tax relief for the wildfire survivors as well.
But Thompson criticized taking out tax relief with one piece of legislation to try to put it back with another piece of legislation.
“This is the wrong message to send to people who have just had their entire life turned upside down,” Thompson said. “It is absolutely wrong-headed, it’s cruel, it’s heartless. And it’s the wrong thing to tell Americans, hard-working middle-class Americans who’ve lost everything.”
“I am going to work to make sure they can write that off, I invite you to join me,” Brady said as the exchange ended.
Thompson brought the proposed disaster tax deduction repeal matter to the county’s attention. That led to a discussion at Tuesday’s Napa County Board of Supervisors meeting.
“This one feels especially egregious in the context of what we’re living through,” Supervisor Brad Wagenknecht said.
Supervisors voted unanimously to send a letter to Congress opposing the move.
“Were almost in a unique position with Sonoma to comment on this particular aspect of it,” Supervisor Diane Dillon said.
The Board of Supervisors might not be done commenting on the proposed Tax Cuts and Jobs Act. Supervisors could at future meeting discuss other provisions that they think would affect the local community.
The House Ways and Means Committee has 40 members: 24 Republicans and 16 Democrats. Go to www.c-span.org/video/?c4690084/thompson-opening-statement to see Thompson’s exchange with Brady.
Among other things, Republicans say the Tax Cuts and Jobs Act will provide tax relief and allow nine of 10 Americans to file income tax returns on a postcard-sized form.