by Congressman Doc Hastings
Last year a landmark law was enacted, with my support, that enabled Washington state residents to deduct sales tax from their federal tax responsibility for the first time in nearly 20 years. This hard-won victory provided tax fairness for those live, work and raise families in Washington, and the eight other states with no income tax.
The 1986 tax reforms eliminated the state sales tax deduction from the federal income tax code, but maintained the state income tax deduction. In addition to Washington - Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming all have no statewide income tax
Under current law, every taxpayer in Washington is eligible to deduct sales tax in tax years 2004 and 2005 if they choose to itemize deductions on their federal tax returns. Taxpayers may either take a deduction on their federal income taxes based on a table of average deductions or provide receipts. Last year, over 11 million taxpayers nationwide took advantage of this new deduction.
Unfortunately, this new opportunity to deduct sales tax will end in tax year 2006 if action is not taken. I believe it is important to achieve permanent tax fairness for our state. That's why I have backed a proposal to make the state sales tax deduction permanent, and I am working with a bipartisan group of lawmakers to encourage a key House Committee to approve our plan in a timely manner.
Our proposal will ensure continued tax fairness, and put more money back it the hands of taxpayers from impacted states. In my view individuals and families are best able to make decisions on how to save, invest or spend their money - not the federal government.
Congress extends tax relief measures on a regular basis, and I'll continue working to make the option to deduct state sales tax permanent. Washingtonians deserve tax fairness now - and into the future.