[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. Res. 294 Introduced in Senate (IS)]








109th CONGRESS
  1st Session
S. RES. 294

Expressing the sense of the Senate on the retention of the Federal tax 
               deduction for State and local taxes paid.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            November 2, 2005

Mr. Schumer (for himself, Mr. Lautenberg, Mr. Durbin, Mrs. Clinton, Mr. 
 Corzine, Mr. Salazar, Mr. Kennedy, Mr. Lieberman, Mrs. Feinstein, Mr. 
Dodd, Mr. Kerry, Mr. Obama, Mrs. Boxer, Mr. Feingold, Mr. Kohl, and Ms. 
Stabenow) submitted the following resolution; which was referred to the 
                          Committee on Finance

_______________________________________________________________________

                               RESOLUTION


 
Expressing the sense of the Senate on the retention of the Federal tax 
               deduction for State and local taxes paid.

Whereas no American should be unnecessarily or excessively burdened with 
        additional taxes;
Whereas the Federal income tax has grown more complicated and unmanageable over 
        time, imposing burdensome administrative and compliance costs on 
        American taxpayers;
Whereas on January 7, 2005, President George W. Bush created the President's 
        Advisory Panel on Federal Tax Reform (the ``Panel'') via Executive Order 
        13369;
Whereas the Panel was tasked with providing several options for Federal tax 
        reform that would simplify Federal tax laws, retain progressivity, and 
        promote long-run economic growth and job creation;
Whereas in its final report, released publicly on November 1, 2005, the Panel 
        recommended the complete repeal of the Federal deduction for State and 
        local taxes, as a central component of both the ``Simplified Income Tax 
        Plan'' and the ``Growth and Investment Tax Plan'';
Whereas State and local taxes have been deductible from the Federal income tax 
        since the inception of the Federal income tax in 1913;
Whereas eliminating the deduction for State and local taxes would create a new 
        form of double taxation at a time where efforts are being made to reduce 
        other forms of double taxation, since repeal would require millions of 
        taxpayers to pay Federal taxes on income that is also taxed at the State 
        or local level;
Whereas Congress has recently taken steps to expand, rather than cut back, the 
        State and local tax deduction, by reinstating a deduction for State 
        sales taxes for some taxpayers (previously repealed as part of the Tax 
        Reform Act of 1986), as part of the American Jobs Creation Act of 2004;
Whereas there is some concern, as noted by the nonpartisan Urban-Brookings Tax 
        Policy Center, that eliminating the deduction could ``lower support for 
        public services and lead to a `race to the bottom' in terms of State and 
        local expenditures as States compete to have the lowest taxes in order 
        to attract higher-income households'';
Whereas the deduction for State and local taxes is not just a concern for a 
        small minority of taxpayers in the largest States, as 22 States saw more 
        than one-third of their taxpayers take the deduction in 2003, the latest 
        year for which data is available (Maryland, New Jersey, Connecticut, 
        Colorado, Oregon, Minnesota, Massachusetts, Virginia, Utah, California, 
        Georgia, New York, Wisconsin, Arizona, Rhode Island, Michigan, Delaware, 
        North Carolina, Illinois, New Hampshire, Nevada, and Idaho (ranked in 
        order of the percentage of taxpayers affected));
Whereas in tax year 2003, 43,538,000 taxpayers in the United States took 
        advantage of the Federal deduction for State and local taxes, deducting 
        a total of $315,690,000,000, thereby saving taxpayers in the United 
        States approximately $88,390,000,000 in Federal income taxes, assuming 
        an average marginal rate of 28 percent for taxpayers who itemize; and
Whereas in tax year 2003, the top 25 States ranked by the number of taxpayers 
        affected represented 77 percent of the taxpayers affected nationally, 
        and took 85 percent of the total deductions for State and local taxes, 
        as detailed below:

    (1) In California, 5,807,000 taxpayers deducted a total of 
$54,920,000,000, thereby saving California taxpayers approximately 
$15,380,000,000 in Federal income taxes.

    (2) In New York, 3,228,000 taxpayers deducted a total of 
$37,600,000,000, thereby saving New York taxpayers approximately 
$10,530,000,000 in Federal income taxes.

    (3) In Illinois, 1,994,000 taxpayers deducted a total of 
$13,720,000,000, thereby saving Illinois taxpayers approximately 
$3,840,000,000 in Federal income taxes.

    (4) In Ohio, 1,809,000 taxpayers deducted a total of $12,720,000,000, 
thereby saving Ohio taxpayers approximately $3,560,000,000 in Federal 
income taxes.

    (5) In New Jersey, 1,791,000 taxpayers deducted a total of 
$18,750,000,000, thereby saving New Jersey taxpayers approximately 
$5,250,000,000 in Federal income taxes.

    (6) In Pennsylvania, 1,765,000 taxpayers deducted a total of 
$12,400,000,000, thereby saving Pennsylvania taxpayers approximately 
$3,470,000,000 in Federal income taxes.

    (7) In Michigan, 1,627,000 taxpayers deducted a total of 
$10,350,000,000, thereby saving Michigan taxpayers approximately 
$2,900,000,000 in Federal income taxes.

    (8) In Georgia, 1,416,000 taxpayers deducted a total of $8,720,000,000, 
thereby saving Georgia taxpayers approximately $2,440,000,000 in Federal 
income taxes.

    (9) In Virginia, 1,355,000 taxpayers deducted a total of 
$9,630,000,000, thereby saving Virginia taxpayers approximately 
$2,700,000,000 in Federal income taxes.

    (10) In North Carolina, 1,304,000 taxpayers deducted a total of 
$8,720,000,000, thereby saving North Carolina taxpayers approximately 
$2,440,000,000 in Federal income taxes.

    (11) In Maryland, 1,260,000 taxpayers deducted a total of 
$10,410,000,000, thereby saving Maryland taxpayers approximately 
$2,920,000,000 in Federal income taxes.

    (12) In Massachusetts, 1,216,000 taxpayers deducted a total of 
$10,840,000,000, thereby saving Massachusetts taxpayers approximately 
$3,040,000,000 in Federal income taxes.

    (13) In Minnesota, 969,000 taxpayers deducted a total of 
$7,060,000,000, thereby saving Minnesota taxpayers approximately 
$1,980,000,000 in Federal income taxes.

    (14) In Wisconsin, 961,000 taxpayers deducted a total of 
$8,000,000,000, thereby saving Wisconsin taxpayers approximately 
$2,240,000,000 in Federal income taxes.

    (15) In Colorado, 856,000 taxpayers deducted a total of $4,570,000,000, 
thereby saving Colorado taxpayers approximately $1,280,000,000 in Federal 
income taxes.

    (16) In Arizona, 841,000 taxpayers deducted a total of $4,110,000,000, 
thereby saving Arizona taxpayers approximately $1,150,000,000 in Federal 
income taxes.

    (17) In Indiana, 832,000 taxpayers deducted a total of $4,530,000,000, 
thereby saving Indiana taxpayers approximately $1,270,000,000 in Federal 
income taxes.

    (18) In Missouri, 772,000 taxpayers deducted a total of $4,890,000,000, 
thereby saving Missouri taxpayers approximately $1,370,000,000 in Federal 
income taxes.

    (19) In Connecticut, 713,000 taxpayers deducted a total of 
$7,970,000,000, thereby saving Connecticut taxpayers approximately 
$2,230,000,000 in Federal income taxes.

    (20) In Oregon, 641,000 taxpayers deducted a total of $5,100,000,000, 
thereby saving Oregon taxpayers approximately $1,430,000,000 in Federal 
income taxes.

    (21) In South Carolina, 574,000 taxpayers deducted a total of 
$3,390,000,000, thereby saving South Carolina taxpayers approximately 
$949,000,000 in Federal income taxes.

    (22) In Alabama, 538,000 taxpayers deducted a total of $2,090,000,000, 
thereby saving Alabama taxpayers approximately $586,000,000 in Federal 
income taxes.

    (23) In Kentucky, 515,000 taxpayers deducted a total of $3,300,000,000, 
thereby saving Kentucky taxpayers approximately $925,000,000 in Federal 
income taxes.

    (24) In Oklahoma, 434,000 taxpayers deducted a total of $2,320,000,000, 
thereby saving Oklahoma taxpayers approximately $650,000,000 in Federal 
income taxes.

    (25) In Iowa, 397,000 taxpayers deducted a total of $2,510,000,000, 
thereby saving Iowa taxpayers approximately $702,000,000 in Federal income 
taxes: Now, therefore, be it

    Resolved, That it is the sense of the Senate that Congress should 
not repeal or substantially alter the longstanding Federal tax 
deduction for State and local taxes.
                                 <all>