Friday, January 4, 2013
When the nation avoided going over the fiscal cliff on New Year’s Day, Washington state taxpayers received a pleasant — but deserved — bonus. Congress reinstated the sales-tax deduction on income taxes for 2012 and 2013.
Lawmakers hung amendments on the fiscal-cliff legislation like ornaments on a Christmas tree.
U.S. Sen. Maria Cantwell, D-Wash., pushed for and succeeded in getting the sales-tax deduction included in the fiscal-cliff deal. She, of course, was not alone. For example, a tax credit for research and development costs and a tax credit for renewable energy such as wind-generated electricity were also included.
This legislation is extremely important to Washington state and Washingtonians.
It means taxpayers in the Evergreen State will be allowed to deduct states taxes like those in other states. Oregonians, for example, can deduct their state income tax payments.
The sales-tax deduction will save state taxpayers collectively about $500,000 million, which is a lot collectively to state taxpayers. It works out to between $500 and $600 per household.
Cantwell said the deal will benefit about 850,000 taxpayers who itemize their income tax returns.
Through 2011, sales tax was deductible. But the deduction was scuttled as senators and representatives established their political strategies. And because only seven states have a sales tax instead of an income tax, their congressional delegations don’t have a loud voice collectively.
Members of Congress have used this deduction as a carrot to woo fellow lawmakers to support their causes or as a stick to punish those who buck them.
This has been going on for close to a decade. Since the sales-tax deduction was enacted in 2004, Congress has let it expire twice since 2009.
Reinstating the sales tax deduction for Washington state should not have been this political. It should have been done as a matter of fairness.
It should have also been made permanent (or as permanent as something approved by Congress can be).
Nevertheless, reinstating the sales-tax deduction — even for two years — was a positive result from the fiscal-cliff legislation.
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