President Bush on Wednesday signed legislation that provides $8.7 billion in tax breaks over 10 years for Gulf Coast businesses, a measure he said is part of the government's plan to help the region rebuild from destructive hurricanes.
"This important bill will help the citizens of the Gulf Coast continue to put their lives back together and rebuild their communities in the wake of the devastating hurricanes that hit the region," Bush said just before signing the legislation.
The measure, known as the Gulf Opportunity Zone Act of 2005, sets up a special enterprise zone in the coastal area where businesses and jobs were destroyed following the Aug. 29 storm.
The tax breaks for business investment are aimed at luring companies into the region and keeping those that are already there. Companies can use a tax credit to defray salaries if they kept employees on the payroll even while shut down due to storm damage.
"This tax act provides incentives for people to move forward," said Bush, who met with business, labor and education officials to discuss ways to match willing workers with jobs in the region.
"This provides a great opportunity to make sure that the folks in Mississippi and Louisiana can find work," he said. "And those are the folks we want to be first in line, by the way. If you're from New Orleans, Louisiana, we want you to be the first person to get the job."
Last week, Bush pledged to rebuild New Orleans' shattered levee system taller and stronger than before Hurricane Katrina struck, requesting an additional $1.5 billion to buttress the system that failed and left the city flooded.
On Tuesday, he extended full federal coverage of the cost of debris removal for Louisiana and Mississippi.
"We want to get the debris out of the way," Bush said. "I can't imagine anything more discouraging than to continue to see the piles — and I mean, literally piles — of debris. And the sooner we can get that debris removed and disposed of, the more hopeful people will become."
He said the Gulf Opportunity Zone Act will help small businesses in the affected area by doubling the expensing for investments in new equipment from $100,000 to $200,000. The bill also provides a 50 percent bonus depreciation, which Bush said means tax relief for small businesses and businesses that purchase new equipment and build new structures.
Other portions of the bill offer special tax-exempt bond authority to rebuild ruined infrastructure, tax breaks to rehabilitate buildings and expanded tax credits to build more low-income housing in the region.
Some tax cuts would help defray the cost of demolition and cleanup, including a special deduction for cleaning up petroleum products and urban areas with environmental contamination known as "brownfields."
Small timber operations and public utilities would get special aid. Students in Gulf Coast colleges and universities would see their education tax credits double.
Individuals hurt by hurricanes Rita and Wilma would get assistance already extended to victims of Hurricane Katrina. Those included expanded abilities to recoup casualty losses and withdraw retirement funds without penalty.
The bill also incorporates some other unfinished tax business. It would extend an expiring law that lets soldiers count their combat pay toward the earned income tax credit, a benefit designed to pull low-income workers out of poverty.