Washington state’s two senators wasted little time Thursday in moving to make permanent the sales tax deduction that Congress passed in the final days of its last session.
Sen. Maria Cantwell on Thursday introduced a bill on the issue, co-sponsored by Sen. Patty Murray and fellow Democratic Sen. Bill Nelson of Florida.
With their party’s newfound majority in Congress and Cantwell’s position on the Senate Finance Committee, the bill has a fair chance of going through, Cantwell said.
“Washingtonians shouldn’t have to wait until the last minute year after year to hear if they’ll be able to benefit from the deduction, as they did in 2006,” the senator said in a press statement.
“We need to make sure that families in our state get a permanent and predictable deduction that returns hard-earned cash to their wallets that they can use to cover everything from college tuition, to rising energy costs, to health care expenses.”
In most states, taxpayers are allowed to deduct state income taxes when they pay federal income taxes each year.
For two decades, however, residents of nine states with a sales tax but no state income tax could not deduct what they paid to the state. Cantwell and other proponents of the deduction argued that it wasn’t fair that those states’ residents were consequently taxed twice. They got the deduction reinstated in 2004.
As a result, residents of Washington state have saved an estimated $500 million per year. In the deduction’s first year, nearly 850,000 taxpayers took advantage of it, saving an average of about $550 per family.
But the deduction was set to expire last year. After wrangling with the majority Republicans in the House and Senate over the bill, it finally won passage in December’s waning days of Congress. The approval came late enough that a specific line for the deduction won’t be on the 2006 federal tax forms.
And it’s set to expire again in two years.
Murray said it’s vital to cement the deduction into the nation’s tax code.
“I am pleased that on the first day of a new session of Congress, we are working to return fairness to the tax system by introducing legislation to make the state sales tax deduction permanent,” she said in a written statement.
Cantwell’s spokeswoman, Elizabeth Ferranti, said that the Democratic majority in Congress puts the senators “in a much better position to get this done.”
Cantwell, appointed to the Senate Finance Committee after November’s election, is only the second senator from Washington to serve on the influential panel, and the first in more than 75 years. Senator Wesley L. Jones from North Yakima, who served in the Senate from 1909 until 1932, served on the Finance Committee during from 1931 until 1932.
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