Stop playing politics with sales-tax deduction
Published 9:00 pm Saturday, August 19, 2006
Note to Congress: Washington is a bona fide member of the United States of America. Its taxpayers are entitled to the same federal tax breaks those from other states get. Yet you keep threatening to take away our ability to deduct state sales taxes from our federal income tax returns.
Knock off the blackmail. Make the deduction permanent.
The latest example of this detestable tactic came earlier this month, when the Senate leadership used an extension of the sales-tax deduction as bait to get Washington Sens. Patty Murray and Maria Cantwell to vote for overloaded bill that would have cut the estate tax and raised (and capped) the minimum wage, among a bevy of other things. Murray and Cantwell wisely resisted.
Holding the deduction like a carrot on a stick in front of senators from states that have no income tax isn’t deal-making. It’s legislative extortion, and it needs to stop.
Taxpayers in the 43 states that have an income tax are allowed to deduct state income taxes from their federal returns – putting a substantial dent in what they pay to Uncle Sam. Congress dropped the sales-tax deduction as part of a tax-cutting bill in 1986, and after 18 years of wrangling, it was finally revived in 2004 – but only for ‘04 and ‘05. If it isn’t reauthorized this year, middle-income Washingtonians could see their federal tax bite get several hundred dollars deeper.
Senate leaders apparently can’t resist hanging onto the leverage they perceive to gain by keeping the deduction in jeopardy. Senate Majority Leader Bill Frist of Tennessee is from one of the seven states held hostage to the tactic, yet he has thus far refused to strip it out for a vote to make it permanent – proving that partisan game-playing can even trump his own constituents’ interests.
Beyond the obvious inequity, keeping the deduction in limbo keeps Washington taxpayers from effectively planning a household budget. Eight months into the tax year, people considering a big-ticket purchase shouldn’t have to wonder whether the sales tax paid on it will be deductible. And it’s unfair to Washington car dealers and other retailers, who stand to lose business as customers put off such decisions.
Simple fairness dictates that taxpayers in the seven states without an income tax should get the same tax benefits as citizens in the other 43. When Congress reconvenes this fall, it should act for fairness.
