FOR IMMEDIATE RELEASE
July 23, 2004
CONTACT: Kevin Schweers
TEXAS DELEGATION PRESSES TO KEEP STATE SALES TAX DEDUCTION IN AMERICAN JOBS CREATION ACT
Provision Would Pump Hundreds of Millions Into Texas Economy
WASHINGTON, DC -- In a bipartisan, bicameral show of support, the Texas delegation today wrote to congressional leaders on the House and Senate tax-writing committees calling for the deductibility of state sales taxes on federal income tax returns. Congress is working to reconcile the House and Senate passed legislation reforming the foreign sales corporation/extraterritorial income exclusion (FSC/ETI) provisions.
The state sales tax deduction is included in the House version of the bill; an effort led by Rep. Kevin Brady. Sen Hutchison has joined Congressman Brady in seeking to allow taxpayers in Texas and six other states deductions for state taxes similar to those already enjoyed in forty-three states. Currently only state income taxes can be deducted.
"Texans shouldn't be penalized for not adopting a state income tax. Correcting this inequity is a matter of simple fairness and could provide an enormous boost to the Texas economy," said Sen. Hutchison, the author of a bipartisan Senate proposal to allow the deduction. "This legislation offers our best hope to right this inequity. I have introduced the exemption in the Senate for years, but it didn't pass. Now we have a chance because of the House action."
Signed by all Members of the Texas Delegation (except House Majority Leader Tom DeLay, due to House protocol), the letter was sent to the Chairman and Ranking Member of the Senate Finance Committee (Senators Charles Grassley and Max Baucus, respectively) and the House Ways and Means Committee (Representatives Bill Thomas and Charles Rangel). The letter follows below:
"We strongly urge conferees to include full state sales tax deductibility language in any final conference report to the American Jobs Creation Act (H.R. 4520/S. 1637). Such a provision would restore fairness to the tax code which was removed in 1986.
"The option for taxpayers in all states to deduct, using either tables created by the IRS or receipts, the higher of their state and local income or sales tax from the individual's federal income tax burden is a critical provision that deserves inclusion in the final bill. Sales tax deductibility will provide a direct economic boost to consumers, especially middle income families.
"For example, in our state of Texas, a family of four with a median annual income of $57,945 could potentially get an additional tax deduction of $928. Estimates from the Texas Comptroller's report indicate that the net tax savings would also generate 16,573 new jobs and $923 million in increased Gross State Product in 2005.
"Sales tax deductibility is a key component to the tax legislation you are negotiating. It is not only an issue of fundamental tax fairness, but is also an economic stimulus that will create jobs and improve the lives of the 55 million Americans living in state income tax-free states."
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