Bill Overview
Title: Disaster Mitigation and Tax Parity Act of 2022
Description: This bill excludes from gross income, for income tax purposes, any qualified catastrophe mitigation payment made under a state-based catastrophe loss mitigation program. A qualified catastrophe mitigation payment means any amount received for making improvements to an individual's residence for the sole purpose of reducing the damage that would be done to such residence by a windstorm, earthquake, wildfire, or flooding. This tax exclusion is retroactive to taxable years beginning after 2020, including by amended return.
Sponsors: Sen. Cassidy, Bill [R-LA]
Target Audience
Population: People receiving catastrophe mitigation payments for disaster preparedness
Estimated Size: 3000000
- The bill impacts individuals who receive catastrophe mitigation payments aimed at improving their residences to reduce damage from specific natural disasters such as windstorms, earthquakes, wildfires, or floods.
- Catastrophe mitigation programs typically target areas prone to natural disasters, so people living in such areas would be affected.
- Millions of people globally live in regions affected by windstorms, earthquakes, wildfires, and floods, making them potential candidates for catastrophe mitigation efforts.
- The impact is mainly financial, as it involves the tax exclusion of particular payments.
Reasoning
- The Disaster Mitigation and Tax Parity Act of 2022 targets individuals who receive qualified catastrophe mitigation payments. These individuals are likely located in disaster-prone states like California, Florida, and others susceptible to hurricanes, wildfires, and earthquakes.
- Considering the budget of $50 million in year 1 and $581 million over 10 years, the policy can only cover a fraction of the potentially eligible population, approximately 3,000,000 Americans who might qualify for tax exclusion benefits.
- The population most impacted are those actively receiving or having recently received mitigation payments and filing taxes, as they will directly benefit from retroactive tax exclusions.
- People with lower incomes or those who recently experienced disasters are likely to experience a higher impact due to greater financial relief.
- The simulated interviews will include diverse perspectives across age, gender, occupation, and location to reflect variation in how individuals process financial relief and manage household resilience.
Simulated Interviews
Teacher (Miami, FL)
Age: 35 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 14/20
Statement of Opinion:
- The tax exclusion will help me better manage my finances during hurricane season.
- It encourages other homeowners in my community to apply for similar grants.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Retired Engineer (San Francisco, CA)
Age: 64 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- Retirement income is limited, so any tax relief is beneficial.
- This will encourage me and my neighbors to invest in further home safety measures.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Software Developer (Houston, TX)
Age: 29 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- Flooding is always a concern, and this financial relief is a huge weight off my shoulders.
- I hope this policy will also raise awareness of available mitigation programs.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 6 | 4 |
| Year 10 | 6 | 4 |
| Year 20 | 5 | 3 |
Freelance Graphic Designer (Los Angeles, CA)
Age: 47 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- The tax break encourages more investment in wildfire mitigation, which is critically needed.
- The impact on my immediate finances is modest but meaningful.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Restaurant Owner (New Orleans, LA)
Age: 55 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 11/20
Statement of Opinion:
- This tax relief feels like a repayment for efforts to keep my home safe from future flooding.
- It highlights the importance of state-backed mitigation programs.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 4 | 4 |
Insurance Agent (Oklahoma City, OK)
Age: 40 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 16/20
Statement of Opinion:
- While my area isn't directly covered by current programs, similar policies could benefit tornado-prone areas.
- Tax relief is always welcome, even if it doesn't apply to me personally yet.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 4 |
| Year 10 | 4 | 4 |
| Year 20 | 4 | 4 |
Graduate Student (Seattle, WA)
Age: 26 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 0.0 years
Commonness: 17/20
Statement of Opinion:
- I see the value in these programs for homeowners, but I'm not directly affected.
- More education is needed to help people connect with available resources.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 4 |
| Year 2 | 4 | 4 |
| Year 3 | 4 | 4 |
| Year 5 | 4 | 4 |
| Year 10 | 4 | 4 |
| Year 20 | 4 | 3 |
Software Consultant (Phoenix, AZ)
Age: 52 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 15/20
Statement of Opinion:
- I'm more concerned about indirect effects like smoke, which aren't directly addressed by the current programs.
- Any policy that reduces disaster vulnerability is a step in the right direction.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 4 |
| Year 20 | 4 | 4 |
Hotel Manager (Orlando, FL)
Age: 37 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 13/20
Statement of Opinion:
- Knowing I can get a tax break while protecting my family is reassuring.
- This kind of policy fosters community resilience.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Wildlife Biologist (Boulder, CO)
Age: 31 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- If implemented effectively, this policy could save lives during wildfire seasons.
- I would feel more secure investing in home improvements with this tax relief.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Cost Estimates
Year 1: $50000000 (Low: $30000000, High: $70000000)
Year 2: $52000000 (Low: $31000000, High: $73000000)
Year 3: $54000000 (Low: $32000000, High: $76000000)
Year 5: $58000000 (Low: $35000000, High: $80000000)
Year 10: $65000000 (Low: $39000000, High: $92000000)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- Retroactive tax impact on the years after 2020 could require amended tax returns, generating administrative costs and complexities both for taxpayers and the IRS.
- Unpredictability in estimating tax revenue impact due to variability in disaster frequency and affected regions.
- Potential positive long-term fiscal effects due to reduced disaster-related expenditures as buildings are made more disaster-resilient.