Cantwell Calls on Congress to Make Tax Cut for Washington Permanent
Cantwell Calls on Congress to Make Tax Cut for Washington Permanent
Over one million Washington state taxpayers will benefit from tax cut
With a bipartisan group of senators and representatives, Senator Maria Cantwell (D-WA) called on Congress to pass her tax relief legislation that would make the sales tax deduction permanent, giving the residents of seven states - including Washington State - a permanent tax cut of over $500 per year.
"Over one million residents in our state would have their tax bills permanently cut if this becomes law," said Cantwell. For almost two decades now, Washington and many other state have been suffering from this inequity and what I think is a lack of tax fairness."
Last October, the Congress passed and the President signed into law Cantwell's legislation that would allow Washington state residents to deduct state and local sales taxes from their annual federal income tax returns. The legislation was passed for only two years. This year, Cantwell has teamed up with Senate Majority Leader Bill Frist (R-TN) and Senator Kay Bailey Hutchison (R-TX) to introduce a measure in the Senate to make the tax cut permanent.
"That isn't just some obscure rewrite of the tax code," Cantwell said. "It's real money to people in their pocketbooks at a critical time when our local economy needs a boost."
1,240,000 Washingtonian tax filers are expected to benefit from this tax cut. That's 84,000 more than previously predicted. (75 percent of the additional 84,000 make less than $75,000 a year.) On average, the sales tax deduction will give Washington state residents a tax cut of $519 to $575 per year. The state Department of Revenue estimates that Washingtonians should save $500 million per year, giving the state's economy a substantial boost.
"The money that Washingtonians save will actually help go to childrens' education, make ends meet, and a variety of things they need to do, but it will also help create jobs," Cantwell said. "Our economic forecaster in Washington state believes that this will help to create about 2 to 3 thousand jobs on an annual basis."
"This is about tax fairness, but it is also about a plan that will help our country grow and have a stronger economy," Cantwell added.
In most other states, taxpayers are allowed to deduct state income tax from their income that is taxed by the federal government. However, residents of states that have no state income tax but have a higher sales tax have not been allowed a sales tax deduction since changes to the tax code were made in 1986. The new deduction affects seven states, including Washington , and can be applied on tax returns for 2004 and 2005.
Senator Patty Murray (D-WA) is also a co-sponsor of the legislation to make the sales tax deduction permanent:
"I am proud to be a co-sponsor of legislation that will help level the playing field for Washington state residents," Murray said. "A permanent sales tax deduction is an important step towards greater fairness for Washingtonians and others across the country."
Murray added, "I applaud Senator Cantwell's efforts to move this legislation forward. She has been a strong and consistent advocate for our state and for making taxes more equitable for Washington families."
In December the Internal Revenue Service released a table, allowing Washington state taxpayers to determine the size of their tax deduction from the state sales tax deduction passed by Congress in October. The table is available online at http://www.irs.gov/pub/irs-pdf/p600.pdf and is also pasted below.
In addition to the table (included below), taxpayers will be able to deduct sales tax paid on certain items specified by the IRS, including motor vehicles, motor vehicle lease payments, boats, and home building materials. Sales tax paid on these big ticket items can be deducted in addition the amounts specified in the table.
The table allows families to determine the amount of their deduction on Form 1040 Schedule A line 5. For example, a family of four earning $40,000 annually would be able to deduct $808.
http://cantwell.senate.gov/news/releases/2005_01_26_salestax.html