Cantwell Announces State Sales Tax Deduction Included in Tax Credit Agreement
Cantwell has been a national leader on efforts to secure an extension. In March, Cantwell and Senator Marco Rubio (R-FL) introduced an amendment to extend the state and local sales tax deduction for one year. The itemized deduction allows taxpayers in states without an income tax to deduct the sales taxes they pay from their federal income tax returns
On February 2nd, she also sent a letter with 14 other Senators to Senate Majority Leader Harry Reid, Senate Minority Leader Mitch McConnell, Senate Finance Committee Chairman Max Baucus, and Senate Finance Committee Ranking Member Orrin Hatch calling for an extension of the state and local sales tax deduction as part of a tax extenders package. Cantwell also secured an extension of the sales tax deduction in December 2010 – which expired at the end of 2011.
Taxpayers in Alaska, Florida, Nevada, Tennessee, Texas, South Dakota, Washington and Wyoming benefit from the sales tax deduction. In 2009, the most recent year for which official data is available, taxpayers deducted less than $16 billion in state and local sales taxes, a small fraction compared to the $236 billion in state and local income taxes deducted on federal returns. But for taxpayers in these eight states, this deduction helps reduce their taxable incomes by nearly $16 billion dollars a year.
The agreement includes the extension of other important Cantwell-backed provisions that have supported job and economic growth in Washington state:
- · Returning Heroes and Wounded Warriors Work Opportunity Tax Credits – These credits have allowed businesses to obtain a tax credit when they hire qualified veterans to fill openings. The agreement would extend this opportunity for one year through 2013.
- · Clean Energy Tax Credits – The deal would extend for two years a provision that encourages the production of biodiesel and biomass fuel sources. It would also continue credits that encourage the construction of energy efficient homes. The 2010 lapse of the biodiesel tax credit resulted in a 42 percent drop in production that year, which led to the loss of nearly 8,900 jobs.
- · Research and Development Tax Credits – Under the agreement Research and Development Tax Credits would be extended for two years. This would ensure that businesses can continue to receive credits as they pursue key research breakthroughs that could benefit the larger economy.
- · New Markets Tax Credit – The New Markets Tax Credit (NMTC) would be extended for two years, under the agreement. The NMTC has invested in key projects that support job growth, leveraging $8 of private investment for every dollar of public funding. Cantwell has urged Senate Finance Committee Chairman Max Baucus to extend the NMTC’s because of its job benefits in Washington state and around the country. Last year she visited Seattle Children’s Hospital, where NMTC helped create 50 jobs, and the Port of Vancouver where the credit helped Farwest Steel bring 200 jobs to the area.