Senate OKs deal on sales tax deduction, energy, timber

WASHINGTON — A new tax deal reached by Senate leaders includes several major provisions sought by Northwest lawmakers.

The bill would extend a multiyear program that pays rural counties hurt by federal logging cutbacks, and would allow Washington state residents to continue deducting state sales taxes on their federal income tax returns.

The bill also extends billions of dollars in tax credits for renewable energy such as solar, wind and hydropower, as well as biomass and geothermal electricity.

Sen. Maria Cantwell, D-Wash., who led negotiations on the energy tax credits with Sen. John Ensign, R-Nev., said the credits could mean tens of thousands of jobs.

Cantwell called the sales-tax provision a matter of basic fairness. Washington is one of at least eight states without an income tax where taxpayers faced the possibility that they could lose the ability to deduct state or local sales taxes from their federal returns.

Sen. Ron Wyden, D-Ore., called the timber payments critical to rural county governments across the West.

The deal breaks a stalemate over a tax-break package that would bring billions of dollars in relief to individual and business taxpayers, developers of clean energy resources, and people threatened by the alternative minimum tax.