Las Vegas Sun

March 18, 2024

Nevadans one step closer to tax break

WASHINGTON -- Start saving receipts.

Nevadans should be able to deduct sales tax from their federal tax returns for 2004 and 2005. On a 208-141 vote, the House passed a huge tax bill late Thursday, changing the law that eliminated the option in 1986.

This could save many Nevada taxpayers $200 to $600 a year each, depending on their tax brackets and filing status.

The bill is likely to pass the Senate, according Senate Majority Bill Frist's press office, but whether the final vote will be delayed a few days by procedural votes remains to be seen. Congress was set to adjourn today but both chambers may extend their session by a few days.

President Bush will sign the bill that includes the sales tax provision, according to the White House.

Once signed by the president, the new law would extend the sales tax deduction through Dec. 31, 2005. Sales tax can either be estimated using a table, based on the number of people in a household and income level, or taxpayers can tally up all their receipts for the year, according to a spokeswoman for the sponsor, Rep. Kevin Brady, R-Texas.

Brady's press secretary Sarah Stephens said anyone who buys a car, makes improvements to their home or makes other big purchases may opt to do a receipt deduction because he or she may pay more sales tax than the table estimate.

Rep. Jon Porter, R-Nev., Rep Jim Gibbons, R-Nev., and Rep. Shelley Berkley, D-Nev., all voted in favor of the bill.

Porter said "all Americans should be treated the same regardless of how they are taxed in their own states. Nevadans have been penalized because they cannot use deductions to reduce their federal liability that other taxpayers use in states that have state income taxes."

Berkley said "Nevadans have the benefit of no state income tax, but as a result, we lose out on a key deduction that could save us hundreds of dollars come tax day."

Berkley supports the deduction but voted against the original bill that contained the provision because she objected to other provisions in the bill. She also wants the deduction to last longer than the two years allowed in the bill.

The bill was controversial because of several provisions critics see as "industry perks," including tax breaks on ceiling fans, archery equipment, cruise ships and $10 billion in assistance for tobacco farmers for 10 years.

Keith Ashdown, vice president of Taxpayers For Common Sense, a Washington-based government spending watchdog group, called the bill a "$140 billion corporate cash cow stuffed to the brim with hundreds of unrelated giveaways and payoffs" and "an orgy of 276 special interest tax breaks."

Beyond the sales tax deduction, the bill also includes Gibbons' energy production tax credit for geothermal energy. The 1.8 cent-per-kilowatt-hour credit will apply for five years for new geothermal facilities to help increase use of the resource.

Republican Sen. John Ensign's "Invest in the U.S.A" bill, which provides a one-year window for American companies to bring money made overseas back to the United States at a 5.25 percent tax rate, is also a provision in the bill.

Under current law, if a U.S. company wants to bring money earned in an overseas factory or office back to the United States to invest, the corporate income tax can be as high as 35 percent.

The idea could generate $300 billion and more than 660,000 jobs, some analysts have said. The money brought back to the United States cannot be used for executive salaries, but only for new hires, research and development or other things that would help employees and the economy, according to Ensign's office.

Other items in the bill:

A change for race car track taxes. Through the change, "motorsports entertainment complexes" such as the Las Vegas Motor Speedway would follow a seven-year depreciation schedule instead of a 29-year one.

A similar break for restaurant owners, a reduction in the depreciation period, 39 years instead of 15 years.

The elimination of a 30 percent tax on foreigners who place bets at U.S. horse and dog racing establishments.

A provision to allow small businesses to immediately expense up to $100,000 of new investments through 2007. They would not be taxed on that $100,000.

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