Leveling the Playing Field

Leveling the Playing Field
March 2, 2005

Tax season is approaching rapidly, and so is the stress and anxiety that often accompany the process of filing and paying taxes. Each year about this time we are all anxious about receiving our W2 Forms and filing our taxes. At one time or another we have all tried to get out of doing them ourselves by finding an accountant to do them for us, or we tend to procrastinate like a senior in college with a bad case of senioritis. No matter how we take care of our W2's, we have to go through the agony of filing our taxes.

Since the beginning of our nation's history, taxes have been imposed on the public in order to pay for the combination of local and state services for the benefit the public. Over time, the system has had its share of flaws. For example, in colonial governments the taxes tended to be regressive, favoring the wealthy and hard on the poor. Now, Texans and others who do not pay state income tax, but pay sales tax, are being treated unfairly.

During the Reagan Administration, the Tax Reform Act of 1986 (TRA86) was put into action to reform the national tax system. This Act was established to create fairness, growth, and simplicity. However, the end result was a tax system that treated the individual differently on the basis of residence and Texans were left high and dry and unable to deduct their sales tax. In 2003 a special report released announced a remarkable plan to grant taxpayers the option of deducting their state and local sales tax, motor vehicle tax or their state and local individual income tax on Tax Form 1040. Prior to the American Jobs Creation Act, Texas was one of the seven states that were not able to receive tax deductions because of the absence of sales tax in our state.

The proposed Permanent Sales Tax Deduction bill will extend the American Jobs Creation Act indefinitely. Recently I joined the team of Senator Kay Bailey Hutchison and Representative Kevin Brady in the fight for permanent sales tax deduction. My office and I are excited about taking on this task for the constituents in my district as well as my other fellow Texans. Those states that do not have state taxes should all be allowed to reap the benefits of sales tax deductions. Texas's sales tax deduction is about as sacred as the Alamo. Texans deserve fair treatment and should be allowed to permanently deduct their sales tax.

The benefits of this tax deduction will extend the benefits of the American Jobs Creation Act by continuing to create more jobs, raising investments by $819 million, and increase the gross state product by $1.2 billion. Texas families across the state will be able to deduct sales tax and save their money for a rainy day or for a much need vacation. Estimated sales tax deduction for families:

For a family of four with income $25,583 to $34,111 the deduction would be around $600

For a family of four with income $59,695 to $68,222 the deduction would be around $1,000

For a family of four with income $102,334 to $119,389 the deduction would be around $1,500

A tax cut puts money back into the hands of Texans and fuels job growth. That is why my colleagues and I are urging that this tax cut become permanent - we want hard-working Texans to be treated fairly, have steady employment and not have to worry about giving as much money to the government.

http://www.house.gov/apps/list/press/tx31_carter/mar2_PlayingField.html