OLYMPIA – U.S. House Republican leaders on Monday agreed to a plan that would allow Washington state taxpayers to deduct as much as $1,000 per year in state sales taxes from their federal tax liability, Rep. George Nethercutt said.
Nethercutt, R-Wash., a member of the House Appropriations Committee, said Majority Leader Tom Delay, R-Texas, and Ways and Means Chairman Bill Thomas, R-Calif., have agreed to authorize the deductions as part of tax legislation now moving through Congress.
Nethercutt is challenging Democratic incumbent Sen. Patty Murray in this fall’s election.
Although details were still sketchy Monday night, Nethercutt said the $4 billion plan would mean as much as $1,000 per year for the next three years for Washington taxpayers. Eight other states, mostly those with no state income tax, also would qualify, he said.
“This is a fairness issue,” since residents of states with an income tax can deduct that tax from their federal liability, Nethercutt said in an interview. “We had this years ago and then it was taken away in the 1980s.
“The important thing is that our economy in Washington state has struggled and this tax relief puts more money in the pockets of the people of the state of Washington.
“This is a fair compromise.”
The entire state congressional delegation has agitated for deductibility ever since then-Sen. Bob Packwood, R-Ore., dealt it away as part of the tax overhaul of 1986. Rep. Brian Baird, D-Wash., for instance, has made it a signature issue.
Nethercutt didn’t mention Baird, but rather credited Washington Republican Reps. Jennifer Dunn, an influential senior member of the tax-writing panel, Doc Hastings and himself.
“We have worked very hard behind the scenes on this,” he said.
The Senate and the White House are likely to concur, he added.
Baird welcomed the development, but described the Republicans as coming late to the party.
“For four years, they’ve been giving tax cuts to millionaires and major corporations and never have been able to put the sales tax deduction on the table,” he said in an interview.
“I guess my attitude is, better late than never. I’m glad. We kind of had to bring them along kicking and screaming.”
The Vancouver Democrat said he secured deductibility in the Democrats’ House version of the tax bill two months ago. The Democratic plan was for a permanent change in the tax code worth about $500 million a year for Washington state.
The average taxpayer under the Democrats’ plan would save between $300 and $500 a year, he said.
It’s a hot-button issue for taxpayers who itemize their deductions, especially for those who live along the Oregon-Washington border and see friends who live a few miles away getting to deduct their state income taxes, he said.
Murray’s campaign spokeswoman, Alex Glass, declined comment on Nethercutt’s announcement, but said, “It is an issue the senator has worked for for a long time and definitely supports.”
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