News Releases

With Time Running Out, Murray, Cantwell and Baird Push for Extension of Sales Tax Deduction

Sep 27 2006

IRS needs changes by October 15 for them to take effect for 2006 tax year

UPDATE: 12/12/06 - Murray’s Efforts Deliver Sales Tax Deduction for 2006 and 2007

WASHINGTON, DC – Wednesday, at a press conference called to highlight the importance of the sales tax deduction and other vital tax cuts for working Washingtonians, Senators Patty Murray (D-WA) and

Fighting for Sales Tax Deductibility

Maria Cantwell (D-WA) and Congressman Brian Baird (D-WA) urged Congress to pass these measures by the end of this week to deliver millions of Americans the tax fairness they deserve. The Senate is scheduled to adjourn on Friday and the Senate Finance Committee has said the IRS needs tax changes by October 15 for them to go into effect for the 2006 tax year, meaning that time is running out to secure an extension of the state sales tax deduction and other critical tax cuts for college students, teachers, and middle class families. A majority of both the House and the Senate has voted for many of these deductions, including the state sales tax deduction, on multiple occasions.

“We’re running out of time to extend this commonsense tax deduction that saves working families across our state over $500 each,” said Cantwell. “The sales tax deduction is a simple matter of tax fairness, of not saddling working Washingtonians with a disproportionate share of America’s tax burden. There are clearly enough votes to pass this measure if it’s considered on its own merits. If we don’t step up now, the sales tax deduction we depend on will expire, shortchanging Washington taxpayers and our state’s economy. An unfair tax hike is the last thing working Washingtonians need right now.”

“We need to restore fairness to our tax system by extending the deductibility of the state sales tax,” said Murray. “The sales tax deduction would put much-needed money directly in the pockets of middle-class Washingtonians while also supporting job growth in the state. It’s time for Republicans to stop playing games and bring clean, targeted-tax relief to the floor of the U.S. Senate.”

“The millions of hardworking families in our state and across this country should be able to count on being treated fairly at tax time every year,” said Baird. “Last year alone, Washingtonians saved over $500 million from the sales tax deduction. That was money that went towards college tuition funds, home improvement projects, and the purchase of family cars. And, that was money that was pumped back into our local economy.”

Legislation currently pending before Congress but blocked by Senate Republican leaders on three separate occasions in recent weeks would extend the state sales tax deduction, the research and development tax credit, a deduction for teachers who use their own money to buy supplies for their classrooms, a deduction for college tuition, and a deduction to help those who work in the Northwest timber industry.

Cantwell and Murray, with Baird’s support, are working with their Senate colleagues to restore tax fairness for Washingtonians and extend these vital tax cuts through stand-alone legislation considered on its own merits. However, Republican leaders continue to block their efforts, insisting that any extensions of these critical tax cuts be tied to controversial legislation to repeal the estate tax for multi-millionaires and a minimum wage proposal that non-partisan, independent experts said would have cut the salaries of Washington state’s tip workers. In July, Cantwell and Murray both voted against this so-called ‘Trifecta’ measure when it came up in the Senate. Even the Trifecta bill’s authors have acknowledged it has little chance of passing.

In most states, taxpayers can deduct state income taxes from their total income taxed by the federal government. However, from 1986 until 2004, residents of states with a higher sales tax in place of state income taxes went without a deduction for sales taxes. In 2004, Cantwell worked with a bipartisan group of senators and representatives, including Murray and Baird, to get this deduction signed into law. Since then, Cantwell, Murray, and Baird have fought continuously to extend the deduction and make it permanent.