There’s plenty of time for Congress to fix the problem, but the new year has brought a huge tax increase for many people in Texas.
As things stand, Texans who itemize deductions on their 2014 federal tax forms will no longer be able to deduct the state and local sales taxes they have paid. All are eligible, but just 20.2 percent of filers take advantage of the deduction.
The deduction was still in effect in 2013, so tax returns due in April can include it. But a year from now, unless Congress reinstates the temporary tax break first adopted in 2004, the average $383 deduction will no longer be available.
The issue really isn’t tax breaks for Texans. The issue is fair treatment for people who live in Texas and six other states that rely on sales taxes instead of state income taxes.
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State income taxes long have been deductible on federal tax forms. As long as that’s the case, sales taxes should be deductible, too (but not both).
One reason to worry is that the sales tax deduction has lost its champion. Texas Sen. Kay Bailey Hutchison pushed it through Congress in a 2004 tax relief bill.
She could only get her colleagues to approve it as a temporary measure, but each time it expired she was able to get it renewed.
Hutchison did not run for re-election in 2012 and retired from the Senate.
It’s time for the state’s two current senators, John Cornyn and Ted Cruz, both Republicans, to pick up the ball.
Cornyn was a strong supporter of the deduction when Hutchison was in office. He co-sponsored legislation to make it a permanent part of the tax code.
Cruz’s office did not respond to a Star-Telegram Editorial Board inquiry about his position on the deduction.
There’s no doubt that the deduction could put some elected officials in a political bind. After all, every dollar that a Texan doesn’t pay in federal taxes is a dollar that doesn’t go toward reducing federal deficits.
And right now, Congress is looking for every deficit-cutting dollar it can easily find.
Still, the sales tax deduction remains a matter of fairness. The U.S. should not favor one form of state and local finance over another.
If there’s a tax break for state income taxes paid, there should be a break for sales taxes paid, just not both at once.