Tax Extenders

Floor Speech

TAX EXTENDERS -- (Senate - November 01, 2007)

BREAK IN TRANSCRIPT

Mr. CORNYN. Mr. President, I understand the chairman of the Finance Committee objected this morning to a unanimous consent request offered by Senator Inhofe regarding legislation that would ensure that American taxpayers would not pay higher taxes next year. The chairman of the Finance Committee indicated they are working on these provisions and he doesn't want them taken up now; he wants to bring them up later.

It is important to talk about two taxpayer-friendly provisions in the IRS Code that will disappear in the next 60 days unless we do something about it. The first is a provision that gives taxpayers the option of deducting their State and local sales tax. My State of Texas, like a handful of other States, does not believe it needs a State income tax. We don't have one. We are not going to get one. What we do want is a level playing field when it comes to the Federal income tax code allowing the deduction of State and local sales tax, just as it allows currently a deduction of State income tax from one's Federal tax return.

State and local governments have a number of options for raising revenue to pay for essential services they provide to their citizens. Some States raise revenues through an income tax. Some States, such as Texas, use a sales tax. Others use a combination of the two. In an effort to help protect people from overly burdensome taxation, the IRS Code has in the past allowed taxpayers to deduct all the State and local taxes they paid from their Federal taxes. Up until 1986, taxpayers could deduct State and local sales taxes. Unfortunately, this was unfairly eliminated. For 18 years, Texans and other States without a State income tax did not have the same level playing field other States had. I view this as a matter of gross discrimination against those States that have a State sales tax rather than a State income tax. It is simply unfair and needs to end on a permanent basis.

That is why 3 years ago, I worked with several of my colleagues to reinstate the State and local sales tax deduction as part of the American Jobs Creation Act of 2004. Without quick Senate action, the citizens of Texas will once again be treated unfairly by the IRS Code by disallowing the deduction of State and local taxes. Our State and local governments have to have the flexibility to collect taxes that fund essential services in a way they find most appropriate without putting our citizens at a disadvantage. Again, make no mistake about it, Texans don't want a State income tax. We are a low-tax, pro-growth State. That is why we have seen 3 million people move to Texas since 2000, because it provides incentives for job creation by small businesses and big businesses alike. We are not asking for the Federal Government to somehow bless Texas adopting a State income tax. We don't want it. What we do want is fundamental fairness.

If the Senate allows this provision to expire, it will be punishing the citizens of my State based on geographic location and preference for a different tax system. Extending the sales tax deduction effectively gives Texans $1 billion in tax relief every year. This money not only helps hard-working middle-class families save money--perhaps to invest in a small business or pay for college tuition for their children--it helps spur economic and job growth as well.

Last week I introduced legislation, along with Senator PAT ROBERTS of Kansas, that extends for 2 years the $4,000 above-the-line deduction for taxpayers who pay for college tuition. We frequently talk about the importance of education on the younger generation, from elementary school through college and beyond. We talk about the importance of continuing education, literally lifetime learning, in order for us to maintain and extend our global competitiveness. Aside from simply encouraging people to pursue a college education, we ought to do our best to make college more affordable and accessible and less of a burden on working parents who want to send their kids to college. Originally part of the Economic Growth and Tax Relief Reconciliation Act of 2001, this deduction allows taxpayers to deduct up to $4,000 from their Federal income tax return regardless of whether they itemize deductions or not. This deduction goes a long way to help families struggling to put their children through college and benefits millions of taxpayers annually.

According to the College Board, this deduction, along with grants and other education incentives, has helped lower the cost for the average student who goes to a public university by $3,600 and $9,300 for those who attend a private college. Both of these deductions keep money in the pockets of taxpayers. In my State of Texas, they allow them to pay for things such as health care, clothing and food, things they need and ought to be able to use their hard-earned money to pay for, rather than writing a bigger check to Uncle Sam. It is appropriate to use the IRS Code not only to provide for fundamental fairness when it comes to allowing the deduction of State and local sales tax from a Federal income tax return; it is also appropriate to use the IRS Code to provide for further educational opportunity.

Right now taxpayers have to work a total of 120 days, about a third of the year, to pay their tax burden, whether it is Federal, State, or local taxes. The last thing we should do is force taxpayers to work more hours, longer days for Uncle Sam and not for their family. Rather than waiting for some future bill to hopefully address this need, the Senate should extend these taxpayer-friendly provisions today. I hope we will have another opportunity to come back to the floor, and I urge the Senate to extend these two important provisions in the near future.

I yield the floor.

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