Sales tax deductibility a matter of fairness
The following commentary, which does not necessarily reflect the views of The Spokesman-Review’s editorial board, appeared Saturday in the Walla Walla Union-Bulletin.
Is it fair the Oregonians can deduct their state income tax from the federal taxes they pay?
Oregonians certainly think it is.
But taxpayers in Washington state, who pay sales tax rather than income tax, don’t think it is fair they can’t deduct the sales tax they pay.
Nor do their representatives in Congress. The state’s congressional delegation, Democrats and Republicans, have been working to allow state sales tax to be deducted from federal income tax in the same way as state income taxes.
The proposal, however, is experiencing turbulence in Congress. It was bounced in the Senate, and the House approved a scaled-down version that allows the sales tax deduction for only two years.
The sales tax deduction is getting knocked around by special-interest groups. The Center on Budget and Policy Priorities (categorized as a liberal group by The Associated Press) questioned the proposal’s fairness in its study.
The study maintains that just one-third of Washington taxpayers would benefit from the deductions because only about a third of taxpayers itemize their federal returns. The study also found that the higher the income, the more likely it was the taxpayers itemize their return. For that reason, the group concluded, this tax break favors the rich.
If so, then allowing Oregonians to deduct state income tax also favors the rich. But we don’t believe most Oregonians see it that way.
Nor, frankly, do we.
Allowing state taxes – whether sales or income – to be deducted is simply a matter of fairness. If sales tax could be deducted it’s likely more Washington taxpayers would itemize their federal returns.
Until 1986, Washingtonians and residents of other sales tax states could deduct those taxes, but that was lost in a massive overhaul of federal tax laws. The state congressional delegation simply wants to reinstate what was taken away.