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GOP Tax Plan Could Hit Wildfire Victims Especially Hard

Critics of the GOP tax plan have blasted the bill as disadvantageous to Americans in blue states, and as historic wildfires continue to blaze in Southern California, Democratic lawmakers there are decrying one reform in particular that seems to single out Californians. The bill proposes eliminating—or at last dramatically modifying—the tax deduction for personal losses due to natural disasters, including fire.

Rep. Nancy Pelosi (D–Cali.) on Thursday took aim at Republican members of California’s congressional delegation who voted for the House bill that eliminated the measure for fire victims but kept in place a break for Americans affected by this year’s hurricanes.

“They actually voted for that bill,” Pelosi said at a press conference. “[The members] voted to discriminate against victims of fire. We certainly want to have the deduction for victims of hurricanes and the rest, but why are they doing this to our state?”

Man wearing face mask sprays fire with hose during California wildfire in December 2017.
A resident hoses down his burning property during the Creek Fire on December 5, 2017. David McNew—Getty Images
David McNew—Getty Images

Pelosi delivered her criticism as six major wildfires are sweeping through the southern part of the state, engulfing homes and forcing residents to evacuate. Authorities on Friday said the wildfires have destroyed or damaged at least 500 structures as they’ve consumed nearly 160,000 acres in recent days. The ongoing fires in California come just weeks after blazes ripped through the Napa Valley region of the state, destroying an estimated 8,400 homes and buildings. Insurance claims due to the wildfires in wine country are pegged at some $9.4 billion—the costliest in state history.

Read More: California Wildfires by the Numbers

Those fires took place in October, and in November, the House passed a version of the tax plan that repeals the deduction for personal casualty losses due to fire. Some California representatives said they supported that bill after receiving assurances that their concerns about the loss of the tax break would be addressed in the final version of the legislation, according to the Los Angeles Times.

California residents stand near hydrant and watch wildfire engulf California hillside.
Residents watch as the Creek Fire burns a hillside in the Shadow Hills neighborhood of L.A. on December 5, 2017. AFP Contributor AFP/Getty Images
Kyle Grillot—AFP/Getty Images

The version of the bill passed by the Senate earlier this month doesn’t eliminate the deduction entirely, but modifies it so it can only be claimed in a federally-declared disaster—a designation many wildfires don’t receive. (The on-going fires are an exception. President Donald Trump deemed them an emergency on Friday.)

The reforms are in line with Republicans’ effort to streamline the tax code and generate more revenue to offset cuts elsewhere.

Read More: As Fires Burn Near Los Angeles, Destroyed Lots Go Up for Sale in Napa

It’s important to note that no matter the outcome of the GOP tax plan, eligible victims of this year’s fires can still claim a tax deduction—so long as they’re able to assess their losses in time for their 2017 tax returns.

Should Republicans eliminate the deduction in the joint bill they’re currently drafting, future victims of wildfires and other natural disasters could still receive tax breaks through special legislation passed by Congress after individual disasters. But Democratic lawmakers in California aren’t satisfied with that approach.

In a joint statement released in November in response to the House tax bill, California Senators Diane Feinstein and Kamala Harris blasted the effort to eliminate the deduction. “Asking victims of wildfires or earthquakes to suffer in order to pay for tax cuts for the rich,” they said, “is the height of cruelty.”