Led by Texas Republican Kevin Brady and Washington Democrat Jim McDermott, a bipartisan letter signed by 64 members of Congress seeks tax treatment fairness for the eight U.S. states that don't have state income taxes.
"Residents of states -- like Texas -- that don't have income taxes are at a unique disadvantage on April 15," said Brady, a senior member of the House Ways & Means Committee. "While residents of states with state income taxes can deduct those taxes from the federal tax, residents with state sales taxes can't and that's simply not fair. That's why we fought so hard for an itemized deduction for states that fund their services with sales taxes. Unfortunately that deduction has expired."
"I will continue to fight to keep the deduction for state and local sales taxes," said McDermott. "This deduction is critical in providing tax fairness to thousands of Washingtonians and other Americans living in states with no income taxes. This deduction ensures that citizens in these states are not forced to shoulder a larger share of the federal tax burden."
Today's letter shows the strong support for continuing the sales tax deduction until comprehensive, fair tax reform can be put in place.
"Hopefully, this will be the last tax extenders package done by Congress and this inequity will be addressed in comprehensive tax reform," added Brady.
Texas Comptroller Susan Combs released a study showing how extending the deduction saves Texans a projected $1.2 billion a year in Texas or an average of $520 per tax filer. Her study showed that the deductions is vitally important to Texas and is associated with between 15,700 and 25,700 jobs.
IRS data showed that 2.1 million Texas filers claimed $4.0 billion in sales tax deductions in 2009, resulting in estimated tax savings of over $1 billion. "Keeping more in a family's budget is vital to our economy," concluded Brady.