R Street welcomes introduction of disaster savings accounts bill
Sponsored by Rep. Dennis Ross, R-Fla., the bill would allow individuals to deduct up to $5,000 per year to be set aside in tax-preferred “disaster savings accounts” to use for expenses related to the mitigation of natural disaster risks, including earthquakes, floods, hail, hurricanes, lightning, power outages, tornadoes and wildfires.
“There’s only so much that the federal government can do about disasters,” R Street President Eli Lehrer said. “Most of the responsibilities of retrofitting and insuring individual homes must be taken on by communities and the private sector. Rep. Ross has exactly the right idea about a proper federal role: limited positive efforts that help people help themselves. This is exactly the kind of thinking that we need.”
The bill would allow unused account funds to be rolled over into subsequent years, and assesses a 20 percent penalty for any funds withdrawn from the funds that are not used for disaster mitigation expenses. It also would allow the $5,000 cap to be adjusted for increases in the cost of living.
While supportive of the bill’s goals, R Street also pointed out that it is essential that Congress identify spending cuts to offset any deficit impact from the bill. Toward that end, the institute already has identified $100 billion of savings that could be realized in the farm bill, as well as a menu of $1.9 trillion in potential cost reductions at the Pentagon.