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

(WASHINGTON, DC) – Thursday, U.S. Senators Patty Murray and Maria Cantwell and Congressman Brian Baird called on Senate Majority Leader Bill Frist and House Speaker Dennis Hastert to make an extension of the state sales tax deduction the first order of business after Congress reconvenes in November. Despite repeated efforts by Cantwell and Murray to extend the deduction before Congress adjourned earlier this month, Senate Republican leaders insisted that any extensions of this and other critical deductions be tied to controversial, unrelated legislation.

“The sales tax deduction and other bipartisan tax deductions included in this legislation are absolutely critical to Americans families,” said Cantwell. “We’ve already missed the IRS deadline to get information on these credits and deductions included in instruction booklets. The longer we continue to wait, the harder it will be for working Americans to save for college and provide for their families. This is too important to delay any longer. It should be the very first issue considered by Congress this November.”

“These tax breaks are being used by families to make ends meet, teachers to improve their classrooms, and students to afford tuition,” said Murray. “Clearly, there is too much at risk to not act immediately on extending these important measures. I am committed to making this our first order of business when we return in November.”

Legislation currently pending before Congress but blocked by Senate Republican leaders on three separate occasions before Congress adjured 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. The sales tax deduction is vital to seven states—including Majority Leader Frist’s home state of Tennessee—that have a higher sales tax in place of a state income tax.

In a letter sent Thursday to Hastert and Frist, Cantwell, Murray, and Baird wrote: “Unfortunately, Congress’s failure to extend the state sales tax deduction has left thousands of our constituents in the dark. Many have refrained from making major purchases out of concern that the state sales tax deduction will expire and no longer be available to them. Congress needs to provide certainty to these taxpayers so they can move ahead with lives and contribute to our local economy.”

Senate Republican leaders have continued to insist that any extensions 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.

The text of Murray, Cantwell, and Baird’s letter follows below:

October 19, 2006

The Honorable Bill Frist
Majority Leader
509 Hart Senate Office Building
Washington, DC 20510

The Honorable Dennis Hastert
Speaker of the House
235 Cannon House Office Building
Washington, DC 20515

Dear Majority Leader Frist and Speaker Hastert:

We write to urge you to bring to the Senate floor as the first order of business in November an up or down vote on a tax extenders package. This critical legislation will extend significant middle-class tax cuts important to Washington state taxpayers like the state sales tax deduction, the college tuition deduction, a deduction for teachers who use their own money to buy supplies for their classrooms, the timber tax and the research and development tax credit.

Despite strong bipartisan support for these tax cuts and the millions of Americans that they stand to benefit, Senate Republicans have held these middle-class tax cuts hostage to election year politics. The Republican majority ignored warnings from the IRS that failure to act by October 15th would cause confusion for millions of Americans who claim these benefits and blocked three attempts by Democrats to pass a tax extenders package in September.

When Congress reconvenes in November, the Senate must act to return fairness to the tax system by extending important middle class tax cuts like the state sales tax deduction. Last year alone, Washington state taxpayers saved $500 million from the state sales tax deduction. Not only does the state sales tax deduction bring much needed money into the pockets of our state’s taxpayers, but it restores equity to our tax code.

Unfortunately, Congress’s failure to extend the state sales tax deduction has left thousands of our constituents in the dark. Many have refrained from making major purchases out of concern that the state sales tax deduction will expire and no longer be available to them. Congress needs to provide certainty to these taxpayers so they can move ahead with lives and contribute to our local economy.

We call on you to bring a tax extenders bill to the floor for an up or down vote as the first order of business in November so we can prevent a tax hike for thousands of Washington taxpayers.

Sincerely,


U.S. Senator Patty Murray
U.S. Senator Maria Cantwell
Congressman Brian Baird