As always, the deductibility of sales tax in the seven states that don’t have an income tax came down to the wire, with Congress issuing a temporary reprieve in December. Congress should make this a permanent change in the tax code, but then members of the other 43 states would lose the ability to take the issue hostage.
The ransom note changes from year to year, but what never occurs is a debate on the merits of making this deduction permanent. Instead, members of Congress recapture the issue as the expiration date nears and new demands are announced.
In the past, this issue has been tethered to debates over the minimum wage and taxes on dividends, capital gains and estates. In December, it was tied to the extension of the Bush-era tax cuts.
It’s always something.
The deductibility of sales taxes returned in 2004, after an 18-year absence. Residents of states with income taxes have the burden lowered because that levy is deductible on federal forms. The rest, including Washingtonians, must wait until the last minute to see whether they can get a similar break.
Some years the haggling goes on so long that the Internal Revenue Service cannot gear up in time. This year is no exception. Washington state residents who itemize their deductions have been told to wait until Feb. 14 (Happy Valentine’s Day!) before working on their tax returns, because it took so long for Congress to agree on the extension for 2010 and 2011.
That means many people will have to wait two to three weeks longer for their refund checks.
U.S. Sen. Maria Cantwell, D-Wash., has introduced a bill that would make the sales-tax deduction a permanent feature of the tax code. She notes that nearly 860,000 Washingtonians took the deduction in 2008, the latest year figures were available. That means about $500 extra for the average itemizer. It’s the kind of economic boost the other 43 states receive without having to continually fight for it.
She, of course, will get the support of the Washington delegation and those in the other affected states: Alaska, Florida, Nevada, South Dakota, Texas and Wyoming. But what she hopes to avert, at long last, is having the issue snatched away and blindfolded before it gets a stand-alone vote.
It’s simple justice. Simple fairness.