The vagaries of the federal tax code

Gary Martin:

Members of both parties introduced legislation Friday that would allow residents of seven states, including Texas, to permanently deduct sales taxes on their federal income tax returns.

Congress, which initially approved the deduction for the 2004 and 2005 tax years, extended it in December for two more years.

Rep. Kevin Brady, R-The Woodlands, joined Rep. Brian Baird, D-Wash., on a bill introduced in the House that would make the deduction permanent.


Sen. Kay Bailey Hutchison, R-Texas, filed a bill Thursday that includes a provision to make the sales tax deduction permanent, something she said was a legislative priority for 2007.

That legislation was co-sponsored Sen. John Cornyn, R-Texas.

Our representatives should really not come home if they don't get this made permanent. Do whatever you have to do; it's a basic issue of fairness to Texas.

Of course, local and state taxes of any kind really should NOT be deductible from federal income taxation, because doing so unfairly penalizes low-tax states while incentivizing higher state taxes. It's basically a transfer of wealth from the South to the Northeast.

Plus, local and state tax deductions skew heavily to the wealthy. My intuition would be that it skews towards the wealthy in total percentages greater than any income tax cuts. Just a guess, but I feel confident saying it. Don't tell it to Chuck Schumer though, he loves the local and state tax deduction.

And really, if City A decides to tax itself to pay for a big new shiny pro sports stadium, and City B doesn't, why are we making City B disadvantaged tax-wise? It makes no sense. But then, sense is often in short supply when it comes to Ways and Means committees.

Posted by Evan @ 01/09/07 01:14 AM


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