A Florida congressman is calling for the creation of a new federal tax-free savings account that will allow homeowners to set aside up to $5,000 to help strengthen their homes against hurricanes and other natural disasters.
Rep. Dennis Ross, a Republican from Lakeland who represents Florida’s 15th Congressional District, recently introduced the Disaster Savings Account Act, which is designed to reduce catastrophic losses by encouraging homeowners to take steps to mitigate the effect of storms on their homes.
Ross, a former Florida state representative, said the bill is a “win-win” for both homeowners and the federal government.
Ross said the disaster accounts could help homeowners reduce the damage to their homes in the event of a natural disaster while also potentially lowering their insurance costs by making them eligible for insurance mitigation credits.
He also said the accounts could reduce the need for federal government spending following hurricanes, tornados, earthquakes and wildfires.
“Natural disasters affect Floridians and Americans across the county,” said Ross in a statement. “This legislation will incentivize people to plan ahead for their safety and reduce the need for taxpayer-funded government intervention in the wake of a natural disaster.”
Under the proposed legislation, homeowners could save up to $5,000 in a tax-deferred account to be used for disaster mitigation expenses. The accounts would have to be managed by a “trustee,” such as a bank or insurance company to ensure the monies are spent on mitigation. A 20 percent penalty would be applied to any funds withdrawn from the account and used for any other purpose.
Any money not used in the account during one year could be added to the following year’s savings.
Eli Lehrer, president, R Street Institute, a free market think tank, supports the Ross bill.
“There’s only so much that the federal government can do about disasters,” said Lehrer. “Most of the responsibility of retrofitting and insuring individual homes must be taken by the communities and the private sector.”