As the members of Congress prepare to hit the road for the fall campaign they should wrap up some no-brainer issues that have been unsettled for too long.
The most obvious of those issues is reinstating the sales-tax deduction for federal income tax. On Wednesday, the Senate Finance Committee approved legislation for the 2012 and 2013 tax years that will allow those living in Washington and other states without income taxes to deduct local and state sales tax from their federal taxes.
Up until last year, sales tax was deductible. But because just seven states don’t have an income tax, the issue has been used for political purposes — to woo fellow members of Congress for their votes or to punish those who won’t follow along.
As a result, the state and local sales tax deduction on federal income tax returns ended on Jan. 1.
This is nothing new. Since the sales-tax deduction was enacted in 2004, Congress has let it expire twice since 2009.
Reinstating the sales tax deduction for the people of Washington state is a matter of fairness. Those who live in Oregon and other states with an income tax can deduct a portion of their state payments from their federal income taxes.
Sen. Maria Cantwell, D-Wash. (and one of the senators up for re-election this year), used her political clout on the Finance Committee to get the issue to this point. The bipartisan deal included several lapsed tax breaks, including those for research and development, renewable energy, transit expenses and others.
The other tax breaks might have merit as they likely will give a needed cash flow to the economy.
But we are certain ending the sales-tax deduction will be a huge blow to Washington state in 2013.
This exemption saves a typical family in Washington state about $600 a year in taxes.
According to the latest IRS data, which is from 2009, nearly 850,000 Washingtonians took advantage of the deduction and reduced their taxable income by over $1.8 billion. This kept $500 million in Washington state.
Congress is playing political games with people’s lives. It’s time to take this tax issue out the political arsenal for both parties.
The Senate and House must make this tax deduction permanent — or as permanent as something can be when Congress is involved.
Washington state families cannot afford a $600 hit at a time when the effects of the Great Recession have yet to subside.