"A Little Insult With Your Injury Perhaps?"


Ah, a tax hike the Bush Administration can embrace--one that hits ordinary citizens the hardest:

While the Road Home program has paid out more than 50,000 grant to help hurricane-affected homeowners, many recipients may have to pay back as income tax as much as 35 percent of their grants.

Normally, the Internal Revenue Service would treat grants from the federally funded, state-run program as nontaxable gifts. But if a homeowner claimed a casualty loss from the 2005 hurricanes and later receives compensation through Road Home, the IRS considers the grant a duplication of the 2005 tax break - and it becomes taxable income the year it was received. Also, some homeowners who claimed a casualty loss - in some cases making that decision before Road Home existed - could end up in a higher tax bracket that requires them to pay more tax on all their income.

For example, accountant Jerry Schreiber said that if Social Security recipients claimed sizable casualty losses and then got large Road Home grants, they may go from not having to file a federal tax return to having to pay taxes on all their income, including their grant and pension.

It's a short article, so by all means read the whole thing if you've got a couple of minutes...and consider how quickly Congress and the administration can get off their flabby elite asses when they feel a campaign issue coming on (e.g., Terry Schiavo). Things only get "difficult and complicated" when you can't turn something into a media event...or a fundraiser.

To be fair, Landrieu and, believe it or not, Jindal, have submitted legislation to exempt grant money from taxes, but I guess there's no opportunity to turn this into a media event or fundraiser, so...you get the picture.

And the money itself? Well, contrary to the childlike opinions of the screetching wingnut minority, it's not exactly a gift. Money in this case is simply a measure of the labor needed to restore was was broken IN VIOLATION of the law, in this case, the Flood Control Act of 1965...a law that's still on the books.