Nadler Introduces Bill to Stop Federal Taxation of Community Development Block Grants for Lower Manhattan

Nov 19, 2003

Washington, DC -- Congressman Jerrold Nadler (D-NY) today introduced bi-partisan legislation entitled the "September 11th Tax Correction Act," a bill that would change current law that imposes federal taxes on Community Development Block Grant (CDBG) funds aimed at inducing business owners and residents to remain in lower Manhattan.

"When Congress appropriated funds to help businesses and residents in lower Manhattan, few realized that the grants offered to these citizens would be taxed by the federal government," said Nadler. "It was not the intent of Congress to tax those who needed the funding most in the days following 9/11. This form of 'help' from the federal government must be changed immediately."

Shortly after the terrorist attacks of 9/11, Congress moved quickly to appropriate $2.7 billion through the Community Development Block Program to ease the economic suffering of business owners and residents in lower Manhattan. Yet at the time, few members of Congress realized that the grants to induce business owners and residents to stay in lower Manhattan would be subject to federal taxation. Nadler's bill would correct this oversight in current law and make retention grants non-taxable.

Previously, Nadler introduced a bill entitled "The September 11th Aid Preservation Act," which would exempt all of the grants provided under the CDBG funds from federal taxation. However, to increase the chances of providing real relief to residents and businesses, Nadler has worked closely with the IRS and other tax experts to revise that bill to specifically target the tax relief to the area of greatest need and increase its chance for passage.

"Residents and business owners in lower Manhattan suffered devastating losses in the aftermath of 9/11," said Nadler. "Taxing these people on grants to help them rebuild is just plain wrong. My bill will ensure that we put a stop to this unfair practice."

Fourteen members of the New York Congressional Delegation have co-sponsored the September 11th Tax Correction Act, including House Ways and Means Committee members Charlie Rangel, Amo Houghton, and Michael McNulty, and Representatives Carolyn McCarthy, Joseph Crowley, Eliot Engel, Sherwood Boehlert, Jose Serrano, Major Owens, Anthony Weiner, Maurice Hinchey, Carolyn Maloney, Louise Slaughter, and Nita Lowey.