Although Congresswoman Maloney supported today’s legislation (H.R. 1134) and commended its author Rep. Mark Foley (FL) for advancing the legislation that protects natural disaster victims from counterproductive taxation on federal relief aid that they receive, Maloney also urged Rep. Foley and other supporters of the legislation not to forget 9/11 victims who suffered similar wrongful taxation on recovery grants after the 2001 terrorist attacks but have yet to see Congress take action on their behalf.

Maloney’s statement on the floor, attached below, is followed by several web resources with additional information on the wrongful taxation of 9/11 aid:

“The bill before the House does right by the disaster victims of Florida and Louisiana, but it does wrong by the New York victims of the September 11th terrorist attacks. When thousands of lower Manhattan small businesses were on the brink of complete failure as a result of the September 11th terrorist attacks, they accepted federal recovery grants but were then told months later that those grants would be taxed and treated as income. That wrongful taxation was the straw that broke the back of many small businesses in New York after 9/11 and it continues to be a burden on small businesses who were forced to take out loans to pay taxes on disaster recovery grants.

“What causes me so much concern, Mr. Speaker, is that we have sought the same redress for 9/11 victims for more than three years, that the members are seeking today for victims in their states. I have introduced legislation to reverse taxation on 9/11 aid, as has Congressman Nadler. I have offered amendments to reverse this taxation, with the active support of Congressman Rangel and many members of the New York delegation. We have testified before the Rules Committee, made numerous speeches before this body, sought hearings for the legislation, and held countless events to seek action from House leaders to reverse this wrongful taxation on 9/11 aid. We have been trying for more than three years to have the small business victims of 9/11 treated fairly, but this body has not found a way to advance that legislation.

“Now, today, we are watching a bill sail to the floor for passage, without a hearing, without a mark-up in Committee, without any of the months and years of effort that I and members of the New York delegation and business leaders from New York have put in to seek redress for 9/11 disaster victims treated wrongly.

“Let me be clear: I find no fault with the repeal of wrongful taxation on the recovery grants for Florida and Louisiana victims of disaster, but I do find fault with the exclusion of 9/11 victims in this bill when we have fought for so long to achieve the same fairness for them. If the federal government should not collect taxes on aid to hurricane victims then why should it collect taxes on 9-11 relief grants?

“I ask my colleagues to remember as well, that the President pledged $20 billion dollars to New York after 9/11 and the aid that has been sent has been greatly appreciated, but we learned this weekend that we are still - more than three and a half years after 9/11 - we are still at least going to end up with $1.3 billion less than that pledge even though total costs from the disaster are estimated between $80 and $100 billion. To have some of the aid that has been received taxed is unfair to New York and to those who suffered the most from the terrorist attacks. The Joint Committee on Taxation estimates the taxation on this 9/11 aid resulted in approximately $268 million that started as recovery aid being sent back to Washington in the form of taxes.

“I call on the authors of this legislation, the House leadership, and appropriate Committee Chairman to do right by the 9/11 victims of wrongful taxation on their recovery grants, and treat them with the same attention and care that we are rightly showing to the victims of disasters in other parts of our nation today.”

See Timeline of Efforts to Reverse IRS Tax Ruling on 9/11 Recovery Grants
& Efforts of Manhattan Chamber of Commerce to Have Wrongful 9/11 Taxation Overturned:
http://maloney.house.gov/index.php?option=content&task=view&id=394&Itemid=61

Description of NY Delegation Effort in 2003 to Pass an Amendment Overturning 9/11 Taxation:
http://maloney.house.gov/index.php?option=content&task=view&id=407&Itemid=61

A Report Showing the Impacts of 9/11 Taxation on Lower Manhattan’s Small Businesses:
http://maloney.house.gov/index.php?option=content&task=view&id=460&Itemid=61

Congresswoman Maloney's Response to the IRS Decision to Tax the Recovery Aid
See Press Release

Congresswoman Maloney's Legislation to Solve the Problem Linked in this Release
See Press Release

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