Estes Encourages Approval of Sales Tax Deduction
Change Could Impact Debate on Public School Finance and Tax Reform
AUSTIN, TX -- State Senator Craig Estes (R-Wichita Falls) applauded the efforts of U.S. Congressman Kevin Brady (R-The Woodlands) to restore the deductibility of state and local sales taxes from federal income taxes paid by Texans, an issue Estes has pursued since first taking office.
Estes pushed hard for the change during the 78th Texas Legislature as author of Senate Concurrent Resolution 1, signed by Governor Rick Perry, memorializing the U.S. Congress to restore the federal income tax deductibility of state and local taxes which was eliminated in 1986. In a display of bipartisan unanimity, Estes' bill was co-authored by all 30 of his Texas Senate colleagues during the 2003 regular session.
"The federal government's income tax system is unfair. It discriminates against Texans because we do not have a state income tax," Estes said. "I just want Congress to recognize this problem and fix it so Texans will be paying their fair share of the burden of federal government."
Estes' ongoing efforts to encourage the U.S. Congress to correct this inequity was answered last week when Brady introduced sales tax deductibility language into the American Jobs Creation Act (H.R. 4520). Brady is a member of the U.S. House Ways and Means Committee which is expected to advance the bill for consideration by the full House within the next two weeks. Brady's language would give taxpayers in every state the option of deducting their state and local personal income taxes or their state and local sales taxes, whichever is higher.
"I appreciate the hard work of Congressman Brady, Ways and Means Chairman Bill Thomas of California, and House Majority Leader Tom Delay for the pivotal roles they played in attaching the sales tax provision to the federal jobs bill," Estes said.
The Texas Comptroller's Office estimates sales tax deductibility would create more than 16,000 new jobs, $590 million in new investments, and $874 million in increased gross state product. An average family of four would save nearly $300 a year in federal taxes.
In addition to the tax savings for Texans, Estes said restoration of the sales tax deduction could impact the current debate on public school finance and tax reform which is expected to be the topic of another special session sometime this summer or autumn. Various finance plans have included proposed sales tax rate increases and the broadening of services subject to sales taxes as additional sources of revenue for public schools.
"It stands to reason that state legislators and taxpayers alike might be more inclined to support higher and broader sales taxes if they can be deducted from our federal tax returns," Estes said.
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