Disaster Relief through the Tax Code: Hurricane Katrina and the Gulf Opportunity Zone

This project investigates the impact of geo-graphically targeted Federal tax relief enacted in the wake of Hurricane Katrina in 2005. To facilitate administration of relief efforts and define eligibility for the temporary tax law changes, the Gulf Opportunity Zone (GO Zone) was created. We estimate the initial impacts of these tax incentives using propensity score matching (PSM) and Mahalanobis metric matching (MM) methods, combined with difference-in-difference (DD) estimation, to limit the confounding influences of observable and fixed unobservable differences between counties affected by these incentives and similarly storm-damaged counties in the region that were not included in the GO Zone. Results show that per capita personal income and net earnings increased more rapidly in GO Zone counties that experienced minimal storm damage than in similar non-GO Zone counties in the GO Zone States and neighboring States., Public Economics, H2, H24, H25,