For 18 years, Washingtonians had large portions of their money unfairly taxed twice. Like residents in seven other states, they were not allowed to deduct state sales taxes when filing federal income taxes.
This inequity was of little concern to the 42 other states that don’t have state sales taxes. Exacerbating the unfairness was the fact that those 42 states were (and still are) gladly deducting their state and local income taxes (which don’t exist in the eight-state group).Fortunately, that came to an end in 2004 when Congress allowed the sales tax deduction, thanks largely to the efforts of U.S. Sen. Maria Cantwell, D-Wash., and U.S. Rep. Brian Baird, D-Vancouver (who retired in 2009). But despite the propriety and common-sense justification of the deduction, affected members have had to march back dutifully and repeatedly coax Congress to extend the deduction. It happened again earlier this month when Cantwell convinced the Senate Finance Committee, of which she is a member, to move forward on a two-year extension of the sales tax deduction, including calendar years 2012 and 2013.
Kudos to Cantwell and others for that success, but two aggravations persist.
First, Congress still needs to act on the measure. Gosh, where have we heard that before? And if this Congress — paralyzed by partisanship — cannot get its act together, Washingtonians stand to lose a considerable amount of money when filing federal income taxes. The most recent published IRS figures, from 2009, show that 850,000 Washingtonians used the sales tax deduction to reduce their taxable income by more than $1.8 billion.
Second, that this sensible, nonpartisan provision has to be continually renewed is simply absurd. It must be made permanent. And as we’ve editorialized before, here is what makes this lingering problem even more frustrating. Many of the other seven affected states are conservative-leaning, politically speaking. There’s also the GOP control of the House. Additionally, there’s the Republicans’ zeal for tax breaks and, while this might not technically qualify as a tax break, failing to extend the deduction certainly would resemble a huge tax increase. Indeed, these eight states combined reduced taxable income by almost $16 billion.
If any politician in the other 42 states screams about that loss of revenue, we would ask them to consider what they save by deducting state and local income taxes from federal income taxes: a whopping $236 billion combined, more than 14 times the amount they’re complaining about.
Democratic-leaning Washington is reaching out to those other states, and we would expect a more aggressive approach from powerful, popular Republican leaders in such places as Florida, Texas, Tennessee and Wyoming. To that end, Cantwell and Sen. Marco Rubio, R-Fla., in March introduced an amendment to extend the state and local sales tax deduction for one year.
More of that kind of aisle-crossing teamwork is needed. Congress has more crucial issues to address. Washingtonians deserve their fair share of deductions. Make this provision permanent, and move on to more bitterly contested matters.