From the Office of State Senator Craig Estes, District 30
For Immediate Release
January 10, 2003
Contact: Lewis Simmons
Phone: (940) 689-0191
Senator Estes calls on Congress to treat Texas taxpayers fairly
AUSTIN -- State Senator Craig Estes, R-Wichita Falls, has filed a resolution seeking to halt the discriminatory treatment of Texas taxpayers who currently cannot deduct sales taxes from their federal income tax returns.
"It's time for the U.S. Congress to stop penalizing hard-working Texas families," Estes said. "As Texans and Americans, we are willing to pay our fair share of the burden of federal government. However, we are no longer willing to pay more than our share."
Senate Concurrent Resolution 1 was prefiled today by Estes for consideration during the 78th Texas Legislature. A dozen other senators already have signed on as co-authors and more are expected to join the effort when the Legislature convenes Tuesday in Austin, Estes said.
State Rep. Talmadge Heflin, R-Houston, will sponsor the resolution in the Texas House of Representatives. Heflin is speculated to be the next chairman of the powerful House Appropriations Committee.
"I expect to receive widespread support from my colleagues in the Texas Senate and the Texas House of Representatives in sending a strong message to Washington," Estes said. "The federal government's income tax system is unfair. It discriminates against Texans because we do not have a state income tax."
SCR 1 calls on the U.S. Congress to restore the federal income tax deductibility of state and local sales taxes that existed before 1986.
Texas and eight other states are denied fair and equitable tax treatment because they have no state income tax, Estes said.
"If residents of states with a state income tax are allowed to make those deductions from their federal income tax returns, Texans should receive similar benefits by being allowed to deduct their state and local sales taxes. That would be fair and equitable. It would level the playing field, and allow Texans to keep more of their hard-earned money," Estes said.
Estes filed the resolution in response to a special report by Texas Comptroller Carole Keeton Strayhorn, who found the benefits would be substantial for Texas families and called on Congress to correct the inequities. The report -- "Restoration of the IRS Sales Tax Deduction Should be One of Texas' Main Priorities in Congress" -- is available online at www.window.state.tx.us.
Under one deduction plan, a family of four with an income of $60,000 could potentially get an additional federal tax deduction of $1,015. A family of four with an income of $30,000 could deduct up to $590 from their federal income taxes, while a single mother with two children and an income of $20,000 could deduct up to $446.
"The current system is unfair," Strayhorn said. "It discriminates against Texans and citizens of other states who have decided against a state income tax. As a result, Texans pay a higher percentage of taxes to the federal government than their neighbors in Oklahoma, which has a state income tax. That's wrong."
The Comptroller's report estimates that the absence of these deductions will cost Texans more than $700 million for the 2002 tax year.
Strayhorn's report estimates the net tax savings would generate more than 16,000 new jobs, encourage $590 million in new investments within the state, and result in an $874 million increase in the gross state product in 2003.
Because Texas taxpayers would have more of their money to spend, Texas' state tax receipts for the three-year period 2003-2005 could be expected to increase by more than $66 million, while the cost to the federal government would be less than one percent of the costs of existing state and local tax deductions, according to the Comptroller's report.
"I am joining the State Comptroller in her request that the U.S. Congress correct this situation. My resolution calls on the U.S. Congress to restore the state and local sales tax deductions to the Federal Tax Code and bring us closer to basic tax fairness," Estes said.