Republicans pushing for sales tax deduction

[Yo_Mama_Been_Loggin]

LES BLUMENTHAL; The News Tribune

WASHINGTON - Republicans say there may be an opportunity in the next few weeks to save Washington state residents $500 million annually on their federal income taxes.

Republican Reps. George Nethercutt of Spokane, Jennifer Dunn of Bellevue and Richard "Doc" Hastings of Pasco are trying to cash in on Congress' tax-cutting fever by asking House GOP leaders to restore federal deductions for state sales taxes.


"It's not a slam-dunk, but it is an opportunity," Nethercutt said.


Democratic Rep. Brian Baird of Vancouver says it's about time his GOP colleagues finally demanded that Congress restore a tax break eliminated 17 years ago in an effort to simplify the tax code.


"They have pushed a host of tax breaks for wealthy individuals, but not for average taxpayers," Baird said in a telephone interview this week just hours after climbing to the summit of Mount Rainier. "They have been AWOL on this."


Since Baird was elected to Congress in 1998, he has worked to restore federal deductions for state sales taxes.

-more-

http://www.tribnet.com/news/local/story/3410377p-3440860c.html

[Ouabache]

1. Why not bring back deduction for credit card interest too

That's one regular folks could sure use.

[Yo_Mama_Been_Loggin]

2. Good point.

Notice how interest rates have fallen everywhere else.....except for credit cards.

[midnight armadillo]

12. Oh, I don't know about that...

My new credit card is a mere 7.9%, replacing one at 12%. This is not too bad for unsecured credit. It just takes some legwork to find the lower rates. In my case this new card is through a university alumni association.

[Piltdown13]

30. Yep, lower rates are out there...

...unfortunately, not everyone qualifies for them. :-(

[Yo_Mama_Been_Loggin]

31. The interest rates on my cards are pretty low too.

Plus I rarely use them. But the average puke starting out with no credit history has to pay higher rates of 18%+

[ewagner]

20. Agree 100%

n/t

[bluestateguy]

3. A tax cut that might actually help working people

And put to bed the notion that the poor "don't pay any taxes". Indeed, working people are hit much harder by sales taxes than the well to do, who are able to save a larger percentage of their incomes.

When Republicans push good legislation we should support it, not oppose it just ebcause they are Republicans. I suspect * would sign it if it came to his desk, but I don't think he'll invest much energy or political capital to get it passed either.

[SoCalDem]

11. Sales tax "relief" only puts an extra squeeze on STATES

like they can afford it NOW..:eyes:

Interest deductions ..100% would stimulate the economy.. and make those greedy credit card companies call bacjk the cards that they sent to "shifty" people and then reduce the rates for the rest of us..

Do unemployed 18 yr olds, really need credit cards???

[AP]

14. States would be better off if they stopped burdening middle

and working classese with regressive sales tax and replaced it with a few new, higer, state income tax brackets.

[truth2power]

16. LOL!!!

LOVE your sig line!!! :-)

[AP]

13. Just get rid of sales tax at state level, if WA is so concerned

Who's going to keep track of all their sales tax? The rich guy who has records for the yacht and the mercedes he purchased, or the single mom on welfare whose sales tax is spread out over thousands of receipts averaging $10 per purchase?

[Melsky]

21. That is exactly the problem

If you have the time and organizational skills to save every receipt, and then figure it all up, that's great. So much the better if you can give the whole thing to your accountant. But the working poor don't have the time for this stuff, and I imagine the people putting these proposals know it.

In theory it might be fair, but I think in practice it would be another tax cut for the well off.

[SeattleDem]

23. it will never happen here

there have been cries to replace the sales tax with an income tax but it is not "politically" viable out here.

The people of this state apparently prefer an 8.8 to 9.2% sales tax to an equitable and progressive income tax. I'd love a sales tax but referedums have failed in the past and the climate here is so anti-tax these days, that the proposal would be DOA.

Plus, if they do pass this sales tax deduction, they aren't going to make you save all your receipts - they have some kind of formula for how much of a deduction you can take for your sales tax. That's what I heard on local radio this weekend. I don't think that's right either - if you're going to give a deduction, it HAS to be tied to what an individual spent, not some adjusted formula for what the "average" person spends.

[Yo_Mama_Been_Loggin]

32. You are correct. There is a formula.

However if you can prove through your reciepts you spent more than the formula you would be allowed the greater deduction. At least that's how I remember it used to be.

Saving reciepts would be useful if that year one made a major purchase like a vehicle or a major home improvement.

[dansolo]

33. But who will keep records of all their purchases?

This is just another tax cut for the wealthy. For poor and middle class people, most of their sales taxes will come through smaller purchases, requiring a huge amount of record keeping. Most people won't bother with all of their smaller purchases, which could add up to a considerable amount. But the wealthy, who purchase more big ticket items, and who have accountants on call who can sift through all of the receipts, will get a huge windfall.

[flamingyouth]

4. Let us Washingtonians not forget

That it was the GOP who brought us the wonderful sales tax on FOOD in the early '80s under Gov. John Spellman - yes, the last Repuke to hold the governorship in this state. Pretty amazing when you think about it.

[aquart]

5. Does this mean you save and append EVERY receipt?

To show the tax man?

Love it.

[Chicagonian]

6. I remember an episode of The Mary Tyler Moore Show-

where she was having her taxes audited, and she had saved all her reciepts, including one from an ice cream man written on a popsicle stick.

in answer to your question-
yes, but-

the 'but' being that you are generally given a standard deduction amount, or you can itemize- in which case you theoretically need the reciepts, should you happen to be auditted.

[havocmom]

19. so the middle class gets to use the standard deduction

and the wealthy trot out big ticket receipts and get to itemize?
Wow, that is helpful (NOT!)

[SeattleDem]

24. no, they will use a formula

From the article:

"The deductions, based on a formula, would be allowed for residents of the seven states that rely on sales taxes and have no state income tax"

This is consistent with what I heard on local radio this weekend too. The formula seems like a bad idea to me - people who pay state income tax deduct that amount, not some formula that may or may not pertain to their individual situation.

Out here, if you can afford it, you drive to Oregon for taxable goods (no sales tax there), or go to Canada, but you'll get a deduction based on taxes you never even paid! Something's not right.

[Nottingham]

7. Ya and those tax cuts aren't gonna do anything for the economy

:bounce: Its a JOKE!

[philosophie_en_rose]

8. Nice thought, but is it worth it?

I realize that many taxpayers pay a large share of their income in sales tax. However, there is no sales tax on food and I sense that many deductions would be for lovely sailboats and big screen televisions. The amount of tax that a family who can't afford taxes has to pay should simply be part of an earned income tax credit. I'm not sure that families will be assisted with a sales tax rebate, as they still have to face the gaping wounds in the state economy.

On Edit: Isn't it a little dishonest for the article to be labelled as a Republican push? They seem to be new to the bandwagon.

[bluestateguy]

9. It could save money for working people

Yes food is not taxed in most states, but plenty of other items you buy at the grocery store are taxable. Whether it's sundry items or kitchen and household supplies. School clothes for children are taxable, as are school supplies, phone bills, college textbooks (execpt in Massachusetts where textbooks are tax exempt) and computers. A sales tax rebate might be a better sell to the American public, as more people will get it, particularly at the bottom of the income scale, and it would show that the poor DO pay taxes.

[philosophie_en_rose]

10. Of course working families pay taxes.

That's the point isn't it? :)

But the sales tax rebate isn't a targeted cut. I'm not an expert on this issue, but the way that it's been presented means that it's essentially just going to let wealthier payers reduce their tax obligation. Instead of food, people take deductions for new cars and other luxury purchases. It's a 8.3 percent discount - with the largest sum going to those who spend the most. If Olympia Repubs need this to show them that the poor pay taxes, they are severely deficient. There must be a better way to reduce the tax than this.

[AP]

15. Sales tax deduction (or, even better, no sales tax) would help

Here's the proof:

What percentage of working and middle class incomes are spent on taxable consumer goods? Alot. How do you know? Because many middle and working class consumers are going into debt every year. They're spending 105% of their income, or 120% of their income. That means they're spending more than they're making, and they're spending on a lot of taxable goods. That means, you're paying tax on money that isn't even income.

Now, what percentage of a rich person's income is spent on consumer goods? Usually, not more than 100%. Rich people are rich because they have more money coming in then going out. That means, unlike poor people, they're paying that sales tax of 7 or 8% on 30% of their income. Whereas, the poor person is paying that extra sales tax on 105% of their income.

Middle and working class people, and anyone who spends most of the money they make, are getting screwed by regressive sales taxes.

[SoCalDem]

17. In a perfect world that would be great, but....

if the states suddenly lost that tax money, they would HAVE to rais income taxes (some states don't even HAVE income taxes). Those piggies at the top of the food chain would squeal like crazy.. States would probably cave in and just charge more (like Calif) on car registration, and other "user services".. Those affect poor people more too..

The only way it would work (repealing the tax) would be if the income lost , were to be made up by taxing the rich people more..

In this republican controlled country , no state would be brave enough to even try..

[AP]

18. They SHOOULD raise income tax -- a progressive tax on income

is better for the economy than a regressive tax on money that you don't even have.

This is the difference between Keynsian economics (give more money to middle class for them to spend on the economy) versus Milton Friedman, Laffer curve, economics (give money to the rich, and watch benefits trickle down).

[BrettStah]

22. Democrats really needs to be a radical on taxes!

I've mentioned this in a few other previous threads, but I think it bears repeating:

Any candidate who proposes the following, and who can sell it well, will have a great chance of winning:

1) Get rid of Social Security taxes, Medicare taxes, federal income taxes, estate taxes. (Wait, I know what you're thinking... keep reading!)

2) Institute a national sales tax on new goods and services at a rate that will exactly replace the taxes in step #1 above. (Wait, keep reading)

3) Give each household a sales tax rebate that's based on the existing poverty level set by the federal government. So if the poverty level for your household size is $20,000, you would get a rebate each year to cover the sales taxes on $20,000 (to be dispersed monthly though, in advance each month).

Some comments to assuage the questions/concerns:

1) The rebate concept means there would be no need to exempt certain categories of goods, or for people to keep receipts, so the regressiveness of the traditional sales tax is greatly diminished.

2) Because of the elimination of the taxes in step #1, all people earning a paycheck will see a nice increase in their paychecks (no more dreaded "FICA" withholdings!)

3) People who don't spend more than the poverty level wind up paying NO federal taxes. Compare that to the taxes

4) The number of taxpayers that need to comply will drop dramatically... now only retailers will collect taxes and forward them on. Much easier to enforce compliance if things are kept simple, and the chances of being audited increases.

5) No more loopholes! No more "let's give a tax break to this industry because they support my PAC", etc.

6) Lower prices... I don't know the exact percentage, but it's probably safe to assume that a good chunk of retail prices is comprised of corporate taxes, employer matching taxes on their employees, etc. Since those taxes would be replaced, prices can be lowered.

[Heddi]

28. so how would things like

Social Security, Medicaid, etc, be funded if their funding didn't come from taxes?

[BrettStah]

29. They would be funded from the sales tax...

The sales tax percentage would be large enough to cover all of the taxes that are eliminated.

[mitchtv]

25. I got an Idea!

How about no one, I mean no one, gets a tax cut ,until the National debt/deficit is gone.

[SuffragetteSal]

26. bingo Mitch!

n/t

[Heddi]

27. How about this?

I read above that the deduction will be an estimated amount based on what the 'average' person of a particular income would spend on taxes, regardless of whether or not an individual paid SIGNIFICANTLY MORE taxes than someone else.

Why not have certain items tax-free?

School Supplies should be tax free (I don't know if they are already) -- and this would go for EVERYTHING -- I'm a college student, so I occasionally have to buy things that a 2nd or 8th grader wouldn't have, but I should be able to show my Student ID and get, say, binders without tax.

Certain foods should be without tax:

Infant formula
baby food
milk
juice
fruit
veggies
meat
toilet paper
hygene things (soap, tampons, deoderant, etc)

Toys and Junk Food and Soda and Clothes and Alcohol and Cigarettes would all cary sales tax.

ANYTHING bought at thrift-stores should be without tax (Because generally lower-income people shop there and would be the greatest beneficiaries of a $2 sweater).

Food, SChool Supplies--those are things that ALL families with children buy--poor and non-poor alike. The poor spend a higher % of their money on 'day to day' things, and having to go school shopping can really set a family back ALOT--especially if they have more than one child (Shit--my mother went broke EVERY year at the beginning of the year b/c of school supplies, and I was an only child)