TEXANS SHOULD BE TAXED ON OUR TAXES NO MORE
It was the year of the Challenger explosion, the Chernobyl disaster, and the return of Haley’s Comet. President Ronald Reagan was in the White House and the Communist leadership was firmly entrenched in the Soviet Union. Movie screens were dominated by box office hits such as Top Gun, and Crocodile Dundee and series like Dallas, The Cosby Show, and Cheers filled television sets. Here in Texas, the Houston Rockets won the NBA’s Western Division and the Lady Longhorns were the NCAA basketball national champions.
Seems like a long time ago, doesn’t it? That was also the last time Texans could deduct their state and local sales taxes on federal income tax forms.
This common sense deduction was eliminated in 1986. Unfortunately, for the past 18 years, taxpayers in Texas and six other states have been held to a separate standard by the Internal Revenue Service. Fifty-five million taxpayers – one in five Americans – are shouldering a higher tax burden simply because their states choose to fund local government through means other than an income tax.
State and local governments have various alternatives for raising revenue. Some levy income taxes, some use sales and property taxes, and others use a combination. My contention is that the federal government should not select only one type of state revenue for special, favorable treatment. There is no logical reason to discriminate against states that have the wisdom to avoid a state income tax. As your Senator, I have fought against this disparity for years and sponsored legislation to correct it since I came to the U.S. Senate.
This year, we have our best chance to end that inequity in the tax code. Earlier this month, Congressman Kevin Brady (R-Woodlands) and I organized a rally of 30 Members of Congress, Democrats and Republicans from all over the country, to support our efforts to reinstate the deduction as part of broader tax legislation in final negotiations between the House and the Senate. It’s not often that a Dallas Republican and a Seattle Democrat see eye to eye but, in this case, the reason for agreement was obvious: People should not pay taxes on their taxes.
Fixing this discrepancy could have a significant economic impact across the Lone Star State. The Texas Comptroller estimates that more than $740 million would stay in the hands of state taxpayers. The average Texas family would save $310 annually and the average family of four would save $928.
Some wonder how this plan could be administered. No, you wouldn’t have to keep track of your receipts all year. When the time comes to file, taxpayers could use tables compiled by the Secretary of the Treasury to determine the amount of the deduction, taking into account the taxpayer’s state of residence, filing status, number of dependents, adjusted gross income, and state and local sales tax rates.
Texans, along with every other U.S. citizen, should not be taxed on their taxes. Correcting this inequity is a matter of simple fairness and could provide an enormous boost to the Texas economy. The status quo is not acceptable and I am committed to achieving this tax fairness now.
September 17, 2004