Representative Mike Thompson’s (D-Napa) Disaster Tax Relief Bill (H.R. 3301) was approved by the House Committee on Ways and Means in June, but has not yet passed the full House of Representatives. The bill includes an extension of important disaster tax relief provisions to help regions hit by natural disasters, including California’s wildfires.
With the latest outbreak of wildfires in California, the bills’ sponsor is working to include the bill as part of the 30 tax extenders House Democrats are looking to renew. Republicans, including Senate Finance Chairman Charles E. Grassley (R-Iowa), have said that Democrats are asking for too much in return for movement on these extenders. Senator Grassley’s office estimates that the Democrats’ package to make the tax extenders permanent could cost as much as $710 billion. As part of a compromise to get these extenders passed, a possible deal could include Democrats agreeing to technical corrections to the 2017 tax law. In addition to the disaster tax relief extender, the bill also includes the New Markets Tax Credit, the Work Opportunity Tax Credit, the credit for biodiesel and biofuels, the credit for short-line railroad maintenance, and a number of other provisions.
The importance of getting these tax extenders passed promptly has only intensified for California with the recent threat from President Trump to possibly withhold California's federal aid for combating wildfires. In 2017, California spent nearly $1.8 billion dollars fighting wildfires. The federal government provides up to 75 percent of firefighting funds and, as per the 2018 federal spending bill, allows the US Forest Service to tap into up to $2 billion in Federal Emergency Management Agency funds to help fight California wildfires.