In the wake of Superstorm Sandy, there is concern regarding the governments role in assistance after a disaster. The key question raised was if the government is subsidizing poor choices in living location; specifically if an area is subject to the occurrence of natural disasters should taxpayers be on the hook for ongoing repair. As a homeowner near Los Angeles (earthquake potential) and a vacation home near Galveston, Texas (hurricane potential), I have an appreciation for both sides of this argument.
In my view, the preferred approach is for the federal and state governments to provide the immediate assistance required to overcome the disaster. However after one year has passed, federal and state taxes should be raised in the impacted region to fully recover all assistance provided; the additional tax could span multiple years, dependent on the magnitude of the assistance. This would transfer fiscal responsibility to those who chose to live in disaster prone regions. For the occasional disaster, this would not be overly burdensome. For those regions with ongoing disasters, the additional taxes would discourage new building and in some cases abandonment. This approach will drive the desired behavior.
I welcome your thoughts on this issue...
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