September 19, 2006 in Opinion

Sales-tax trickery

• Print
• Email
• Share

Don’t worry. You’ll get your sales-tax deduction extended.

That’s been the message of congressional leaders since Congress passed a bill in 2004 that allowed tax filers in states that don’t have an income tax to deduct state and local sales taxes.

But if Congress doesn’t act soon, income taxes will shoot up for the 8.6 million Americans who take that deduction on their federal returns. And the promise to protect it will be broken.

Oddly, the man who can do the most to end this injustice resides in one of the eight states directly affected, but he is clinging to a game of legislative chicken.

Senate Majority Leader Bill Frist, R-Tenn., is for the extension of the deduction, which expired in December. But he’s also for a permanent repeal of the estate tax. His strategy is to once again force senators to vote for both or get neither.

Muddying his patchwork tax package is a disputed provision that critics say would allow employers to cut the wages of workers who get some income from tips. To lure the votes of Washington state Sens. Patty Murray and Maria Cantwell, Senate Republicans tossed in a large tax break for the Northwest forestry industry.

Frist’s gambit failed in August when he wasn’t able to gain enough votes. Now he needs to make good on his vow to protect the sales-tax deduction.

Back in May, when the deduction was removed from a $70 billion tax-cut package, Frist told Americans not to worry: “I fought hard to return fairness to the tax code by restoring the sales tax deduction, and I look forward to securing its extension.”

At the time, Rep. Brian Baird, D-Wash., seemed to be overreacting when he said renewing the deduction would be “a little dicey.” Now we’re days away from his fears being realized.

Perhaps Baird was able to gaze into the future and see the deduction as a political hammer to bludgeon candidates such as Cantwell, who is being criticized for voting against the bill in which the deduction was being held hostage.

Congress is scheduled to adjourn for the year soon, as members hit the campaign trail. It’s possible that when the election spin on this issue is played out, Congress could be called back into session and the deduction could be rescued. But the issue should never have been tied to the railroad tracks to begin with.

In May, Congress voted on a two-year extension for a lowered tax rate for investment and capital gains income. That tax cut wasn’t set to expire until 2008.

If congressional leaders were acting rationally and responsibly, they would have tabled that issue and taken up the more pressing sales-tax deduction.

But election years are hell on logic and fairness, and the result is that millions of tax filers are facing tax bills next year that will be $500 higher, on average.

When that bill comes due, taxpayers are going to be angry. And rightfully so.

Congress needs to not only pass this deduction, it needs to make it permanent so it can be free from the clutches of political schemers.

It’s unfair that taxpayers in 42 states can deduct state and local taxes while those in the rest can’t. When all of the gamesmanship is untangled, it’s really that simple.

No comments on this story so far. Add yours!