Berkley, others push deductions for sales taxes

Suzanne Struglinski

Thursday, Sept. 9, 2004 | 11:20 a.m.

WASHINGTON -- Lawmakers from states without an income tax are pushing Congress to pass a law that could put about $300 in federal tax back into the pockets of each of their residents, including Nevadans.

The House approved a bill in June that would allow those who do not pay state income tax to deduct state and local sales taxes on their federal returns for the next two years. The Senate has not approved the change yet.

"This needs to be permanent and it needs to be permanent now," Rep. Shelley Berkley, D-Nev., said.

Berkley and about 20 other Republican and Democrat House members and senators from the seven states that do not have a state income tax asked for "Tax Fairness Now" today as Congress begins work again after its August recess.

"We are not going home without sales tax deductibility," Rep. Kevin Brady, R-Texas, said. "We are at risk of losing this opportunity for another two decades."

Until 1986 taxpayers could deduct state sales tax on their federal return, but Congress changed the law as part of the Reagan tax reform, and since then lawmakers have wanted to change it back.

The congressional Joint Committee on Taxation has estimated the measure would cost $3.6 billion over the two years.

Sen. Kay Bailey Hutchinson, R-Texas, said this is the closest Congress has been in a while to passing the tax law change and there is "real hope for equity" by the end of this Congress. She said Senate leaders from each party support the idea and senators from affected states would work to get it through.

Estimates are hard to pinpoint for individual taxpayers as it will vary from tax bracket to tax bracket, but Berkley said if the change had been approved in 2000, Nevada taxpayers would have saved $212 million. All federal taxpayers who itemize their tax returns would eligible and estimates from change supporters show taxpayers could save between $300 and $600 a year each.

Berkley voted against the corporate tax bill the House passed that contained the change because she opposed other provisions it contained. Nevada Republican Reps. Jon Porter and Jim Gibbons voted for it.

Berkley wants to see the change passed but would prefer it on a stand alone basis, she said. She does not want the two-year limit but a permanent change.