Give us a break on state sales tax
For the past two years, Washington taxpayers got a well-deserved break on their federal income tax: They were allowed to deduct state sales tax from their returns.
A tax bill that passed the U.S. House wrongly fails to continue that deduction, which expired last December. It may be small potatoes among bigger tax cuts, but it is no small matter to residents of Washington and six other states who pay a state sales tax and no state income tax. In Washington, the sales-tax break amounts to $500 million annually.
Residents of states that rely on state income tax deduct the tax from federal returns so they don't double pay. Residents of Washington also should be able to deduct a tax they pay in large amounts to the state.
Sales-tax deductibility was not included in the latest bill but it can and should be fixed in deliberations on any upcoming tax bill, hopefully in the next few weeks.
U.S. Rep Brian Baird, D-Vancouver, has been working for sales-tax deductibility for years, and with the help of the rest of the Washington delegation and lawmakers from other affected states, secured the break for tax years 2004 and 2005.
Estimates from a few years ago show the average Washingtonian pays $1,640 a year in sales taxes, highest of any of the no-income-tax states.
Deducting the tax makes a difference to individuals and the broader economy.
Sales-tax deductibility sounds like a mouthful, but it is sound and fair tax policy that should be reinstated — and reinstated retroactively — as soon as possible.
Copyright © 2006 The Seattle Times Company