Volume 1 Number 26
June 28, 2004









 

 


 

CONGRESS CONSIDERING STATE SALES TAX DEDUCTION REVISION

Thursday, June 17, 2004, the House of Representatives in Washington D.C. voted on H.R. 4520, legislation that includes a provision reinstating the state sales tax deduction.  By restoring this deduction that was eliminated in 1986 during revision of the federal tax code, taxpayers in states without an income tax -- like Florida -- would be allowed to deduct their state sales tax from their federal tax return. State income taxes are still deductible from federal income taxes. For 2004 and 2005 — at a cost to the U.S. Treasury of $3.6 billion — the bill would let taxpayers deduct either tax, -- whichever is the highest. 

An average family of four would save nearly $300 in federal income taxes annually. It gives greater fairness to the tax system by treating taxpayers in all 50 states equally and ending the federal bias against sales taxes. If it becomes law, a taxpayer could either save receipts or take deductions from a chart of estimated sales tax based on income and the size of the family.

Governor Jeb Bush has been lobbying Congress for the past two years to restore the deduction.

 Florida’s CFO Tom Gallagher supports this provision of the bill for the good of Florida taxpayers. “It will provide needed tax relief combined with economic stimulus for the state. I encourage Congress to make it a permanent part of the federal tax code,” Gallagher stated.