WATCH: Padilla highlights bipartisan legislation to provide tax relief for fire victims

August 1, 2024 - WASHINGTON, D.C. — On Wednesday, as the Park Fire and other wildfires burn across California and force communities to evacuate, U.S. Senator Alex Padilla (D-Calif.) delivered remarks on the Senate floor urging his colleagues to pass the Wyden-Smith tax proposal, which includes his bipartisan legislation to provide tax relief for wildfire survivors who have received compensation for the losses and damages they have suffered. The tax bill previously passed with overwhelming bipartisan support in the House of Representatives.

Padilla’s Protect Innocent Victims Of Taxation After Fire Act, co-led by Senators Bill Cassidy (R-La.), Jon Tester (D-Mont.), and Cynthia Lummis (R-Wyo.), would provide past and future wildfire survivors with the certainty that their settlement money will not be taxed. The bill would support the nearly 70,000 victims of the three major fires in 2015, 2017, and 2018 who are receiving funds from the Pacific Gas and Electric Company (PG&E) Fire Victim Trust through a $13.5 billion wildfire settlement, as well as future recipients of other wildfire-related settlements. Representatives Doug LaMalfa (R-Calif.-01) and Mike Thompson (D-Calif.-04) are leading companion legislation in the House of Representatives.

Padilla’s remarks also emphasized his support for critical provisions in the tax proposal to support American families, such as restoring critical expansions to the child tax credit to lift an estimated 400,000 children above the poverty line and bringing back the 12.5 percent increase to the Low-Income Housing Tax Credit allocation to help finance more affordable housing.

Video of the full remarks can be found here.

A full transcript of his remarks as delivered can be found here.

Key Excerpts:

• I rise today in support of every parent across the country working multiple jobs to help put food on the table, parents who are now buying school supplies and clothes as their kids are preparing to go back to school, parents who are working hard just to afford basic child care.

• And I rise today for every constituent of mine wondering why Senate Republicans continue to block a bill that passed with overwhelming bipartisan support in the House of Representatives.

• We know these policies can work. We know these policies have worked. We know that letting them expire has been detrimental to so many parents, so many children, and so many communities across the country. And we have today an opportunity to do right by them once again.

• When a fire victim is wading through the ashes of their former home, and thinking about how to rebuild, not just their homes, but their lives, the last thing that wildfire victims should have to worry about is how they’re going to pay taxes on any settlement they receive.

• Madam President, disaster settlement funds are not income. Disaster settlement funds are not assets. It’s compensation for what they’ve lost. And insufficient most of the time at that. But disaster settlement funds are also meant to be an opportunity to begin to rebuild your life, an opportunity that should not be diminished because our government tax codes are outdated.

• So I was proud to see that the Wyden-Smith tax package includes my bill, the Protect Innocent Victims of Taxation After Fire Act. It would make sure the people who have suffered from a heartbreaking wildfire can receive full compensation for their losses, without the fear that their settlements will be subject to taxes.

• It’s a commonsense, bipartisan solution to protect Americans at arguably the most difficult point in their lives. And for that reason, along with the historic provisions included in the package to make life more affordable for working families, I urge my Republican colleagues to join me in supporting this bill.

Last Congress, Padilla joined the late Senator Dianne Feinstein in introducing a version of the Protect Innocent Victims Of Taxation After Fire Act designed to cover the Fire Victim Trust claimants. This bill expands protections to anyone receiving wildfire-related disaster aid payments, including compensation for losses, expenses, or damages, such as compensation for additional living expenses, lost wages, personal injury, death, or emotional distress.

A one-pager on the Protect Innocent Victims Of Taxation After Fire Act is available here.

Full text of the bill is available here.
Source: Senator Alex Padilla