A bi-partisan measure that makes the sales tax deduction in the federal tax code permanent was successfully passed out of the U.S. House Ways & Means Committee today. The measure led by U.S. Congressman Kevin Brady (R-TX), a senior member of the House Ways & Means Committee who helped restore the deduction in 2004 “is about tax fairness for families in states that don’t impose a state income tax.”
“Taxpayers in income-tax states have a permanent deduction for their state and local taxes, so it is a matter of fairness that residents of sales tax states can count on their deduction as well,” added Brady after the bill passed out of committee today by a 22 to 14 vote.
Under current law American families can choose to deduct either their income or state taxes, whichever is larger. Many Americans use a specialized tax calculator to determine this. However, a lot of tax software is equipped to figure this out as well.
“This tax provision helps hard-working taxpayers keep a little more of what they earn, which is even more important to families given their stagnant paychecks over the past years,” added Brady. “More than 10 million American taxpayers depend upon this common-sense deduction, and the dollars that stay in the local community helps grow their economy rather than Washington’s economy.”
“Permanency provides certainty to American families, makes federal budget scorekeeping more honest, and removes the asterisk from this temporary provision so that pro-growth tax reform can advance.”
“It’s certainly important to our state,” says Brady. “Since it’s been restored Texas taxpayers have saved more than $10 billion – which buys a lot of school clothes, gas for your car and helps with rising college costs. These dollars help grow the local economy rather than Washington’s economy.”
Proponents say that since 2004 the sales tax deduction has leveled the playing field for millions of Americans who previously paid more in federal income taxes because their state chose to use sales taxes as their preferred tax structure.