CORNYN, HUTCHISON CALL ON SENATE TO PASS STATE SALES TAX DEDUCTION BILL

These two Republican Senators are always stepping up to the plate.

WASHINGTON – U.S. Sen. Kay Bailey Hutchison (R-TX), chairman of the Republican Policy Committee, today re-introduced legislation to make permanent the ability of Texans to deduct state sales taxes on federal tax returns. Sens. John Cornyn (R–TX), Lamar Alexander (R–TN), and Bob Corker (R-TN) are also original cosponsors of the bill.

“It is essential that in our country we have the same treatment for the people of every State regarding how they pay their State taxes,” Sen. Hutchison said. “Since I came to the Senate, I have tried to equalize this inequity. Finally, in 2004, we were able to do that, and now we cannot let this equity go. Sales taxes must be made permanently deductible in order for all taxpayers in all states to be treated equally.”

“This is a matter of fundamental fairness for Texas taxpayers,” Sen. Cornyn said. “Making the sales tax deduction permanent will put our state on a level playing field with others that can deduct their state income tax. Texans should be allowed to keep their hard-earned money, not be punished with an additional tax.”

“Making state sales taxes deductible will put more than $400 in the pockets of nearly 600,000 Tennesseans who itemize their taxes this year,” Sen. Alexander said. “Doing so permanently is an issue of fairness for Tennesseans.”

“This is a simple matter of tax fairness and common sense,” Sen. Corker said. “Tennessee is fortunate not to have a state income tax, but Tennesseans should not be penalized for this on their federal tax returns. Making the state sales tax deduction permanent keeps more money in the pockets of hard-working families and it’s the right thing to do.”

Losing this deduction would cost Texans almost $1 billion a year, equaling $310 per year for the average family of four. Over 52 million Americans live in the eight states that do not levy income taxes (Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming).

“Texans have their purchases taxed by the state government, and then are taxed by the federal government on the income they use to pay the sales tax,” Sen. Hutchison said. “It’s just not fair for Texans to pay additional taxes on the very money they used to pay their state tax.”

Before tax reforms were signed into law in 1986, taxpayers were allowed to deduct their sales taxes on their federal tax returns. Sen. Hutchison worked with Rep. Kevin Brady (R-TX) to include this deduction in the 2004 tax relief bill. That legislation included a temporary deduction that expired at the end of 2005.

In 2006, Sen. Hutchison secured a two-year extension of the sales tax deduction, but continues to push for making this equitable deduction permanent. On January 4, 2007, the first day of the 110th Congress, Sen. Hutchison also introduced legislation to provide a permanent state sales tax deduction and marriage penalty tax relief. On March 22, she passed an amendment to the Fiscal Year 2008 Senate Budget Resolution to make the state sales tax deduction permanent.