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Sam Johnson votes to extend the state sales tax deduction for 2008
Lauds tax measure as real solutions for Texans

Washington, May 21 -

Today U.S. Congressman Sam Johnson (3^rd Dist.-Texas) backed “real solutions for Texans” when he cast his vote to extend the popular state sales tax deduction through 2008.  The House passed H.R. 6049, the Renewable Energy and Job Creation Act of 2008, that included a provision to include state sales tax deductibility in the federal income tax code for 2008, among other things.

In 1986, Congress eliminated the state sales tax deduction. In 2004, Johnson used his seat on the tax-writing committee and worked tirelessly to resurrect the state sales tax deduction.  Nearly each year since 2004, Johnson has had to fight to extend the measure.  The popular deduction expired in 2007.

“Texans are proud of the efficient and cost-effective government that we’ve got in our State and we should be able to deduct the cost of that government – financed through sales taxes – just like residents of other states can deduct their state income taxes,” said Johnson. 

Prior to 2004, taxpayers could only deduct their state and local income taxes and their property taxes.  Ending the state sales tax deduction in 1986 translated into higher tax bills for the taxpayers of seven states that rely upon sales taxes - Texas, Florida, Tennessee, Wyoming, Washington, South Dakota and Nevada. 

Johnson bucked his party leadership when he voted with the Democrats in Congress to pass the tax measure.  “This bill is about solutions and these are real solutions for Texans,” said Johnson.

Johnson also lauded many other top tax legislative priorities included in H.R. 6049.  First, the Act extended the critical tax deduction for teachers who purchase supplies with their own money.

Second, the initiative encourages the production and use of renewable energy.

Third, the measure allows companies to continue to use the Research and Development (R&D) credit, important to Texans, home to many high-tech companies with good-paying jobs.  “America has jobs that foreign nations would love to have.  Foreign governments routinely offer very generous incentives to companies to move these high-tech jobs to their countries.  The one national policy we’ve got to keep these high-tech jobs in this country is the currently-expired R&D tax credit,” continued Johnson.

“The R&D credit is something that I believe is particularly important to the defense industry in America.  The weapons systems for our troops must be the best engineered and designed systems in the world.  Our defense industry cannot be put at a competitive disadvantage to global competitors,” said Johnson.

Fourth, the bill finally ends the unfair alternative minimum tax on “phantom gains” as a result of incentive stock options.  Since 2001 Johnson has championed the end of the unjust and punitive tax on paper gains, authoring legislation and maneuvering behind the scenes to carve away at this tax.

“In many situations, the tax imposed on phantom income from incentive stock options has caused my constituents to live under an I.R.S. imposed budget, forced them to drain their retirement accounts, and pushed others to empty their children’s college savings accounts.  Worse, the I.R.S. has seized the homes of others to pay taxes on phantom income they never saw. It is time to end this tax nightmare,” concluded Johnson. 

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