[Congressional Record Volume 147, Number 13 (Wednesday, January 31, 2001)]
[House]
[Pages H132-H133]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   TAX DEDUCTION FAIRNESS ACT OF 2001

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Washington (Mr. Baird) is recognized for 5 minutes.
  Mr. BAIRD. Mr. Speaker, I rise today to introduce legislation that 
will help restore tax fairness to millions of people in my State of 
Washington and throughout the country. Joining me in this effort today 
is the gentleman from Tennessee (Mr. Clement), my good friend and 
colleague, who has been instrumental in helping draft this legislation.
  The problem we are referring today to, Mr. Speaker, is a basic 
unfairness in

[[Page H133]]

the current Tax Code. In my home State of Washington and in other 
States, such as Florida, Nevada, South Dakota, Tennessee, Texas, and 
Wyoming, a State sales tax takes the place of a State income tax as the 
primary means for raising revenue.
  Every year in April, taxpayers send their tax returns to the IRS. It 
is a ritual to which all Americans have become accustomed. Although we 
do not always like it, we realize it is part of our duties to the 
country.
  But the ritual brings added frustration for taxpayers in my State who 
feel cheated by what they pay into the Federal Treasury. A taxpayer of 
identical income and expense in almost any other State would be able to 
deduct the amount that they pay their State in income tax; but in 
Washington, we cannot do that.
  Folks in my State have the same amount withheld from their paychecks; 
but when they itemize their taxes, they deduct a significantly lesser 
amount. Because of the tax reforms of 1986 when lawmakers decided to 
remove the deduction for sales tax, Washingtonians were shortchanged. 
In fact, the Congressional Research Service estimates that Washington 
State taxpayers are penalized to the tune of $450 million every year 
when compared to their neighbors.
  Should residents of Washington and the other States with sales taxes 
pay hundreds of dollars more to the Federal Treasury than States which 
choose to tax residents through income taxes? Of course not.
  Federal taxes should be levied on all of our Nation's citizens in a 
fair and equitable manner that does not give preference to one State or 
another.
  That is why, along with the gentleman from Tennessee (Mr. Clement), I 
am introducing today legislation to correct this inequity. Our bill, 
the Tax Deduction Fairness Act of 2001, would reinstate the sales tax 
deduction and direct the IRS to develop tables of average sales tax 
liabilities for taxpayers in every State. It would then give the 
taxpayer the option to deduct either their State sales tax or their 
State income tax when they file their Federal return.
  The bill will not make the State or the Federal Income Tax Code more 
complicated. In fact, it will add one simple line and take about 60 
seconds to complete. I do not know about my colleagues, but taking 60 
seconds to look on a simple chart in a way that would save me $400 to 
$500 a year is a pretty good investment in time. Adding that line will 
save hundreds of millions of dollars for American taxpayers every year, 
and it is all about fundamental fairness.
  Let me give my colleagues a couple of very real human examples. Brian 
and Cathy Lux and their three kids, Carissa, Devon and Tristian, live 
in Brush Prairie, just outside my home town of Vancouver, Washington. 
Brian is a finance manager for a local auto dealership, and his wife, 
Cathy, is a licensed home care provider.
  All told, the Luxes make between $70,000 to $80,000 a year, not a 
huge amount for a family of five. Working with the IRS, my office 
estimates that the Luxes paid an average of about $1,700 in sales taxes 
last year, but they were able to deduct none of it from their Federal 
return.
  However, under our bill, they would get nearly $500 of their tax 
money back. For Brian and Cathy, that $500 would be nearly a month's 
worth of groceries; or when their kids get a little older, it would be 
a semester of tuition at the local community college.
  Mr. Speaker, now is the time to fix this inequity in the Federal Tax 
Code for all Brian and Cathy Luxes and for all of the similar families 
throughout the country.
  The new administration campaigned on fair and just tax relief, and I 
support that promise. But I cannot think of anything more fair than the 
bill that the gentleman from Tennessee (Mr. Clement) and I are 
introducing today. If we penalize people for being married, so too it 
must be unjust to penalize people for living in States that opt to tax 
their citizens through a sales tax. I welcome the bipartisan spirit of 
the new administration, and I urge members to support this legislation 
that is all about fairness and simplicity and will help working 
families throughout this country.
  Mr. Speaker, I yield to the gentleman from Tennessee (Mr. Clement).
  Mr. CLEMENT. Mr. Speaker, I thank the gentleman from Washington (Mr. 
Baird) for yielding and congratulate him because I know that he has 
been a leader in the State of Washington on this issue, but has also 
been a leader across the country on this; and it is a pleasure to join 
forces with him because what we are trying to do is correct inequity, 
correct tax unfairness.
  This came back to us in the 1986 tax reform. Prior to 1986, we were 
able to deduct our State sales tax from our Federal income tax return. 
But in the 1986 tax reform, that was taken away from us. It was an 
oversight, and now we want to correct that oversight once and for all 
for those seven States that are left out. We should not be forced to 
move to a State income tax in Tennessee or Washington or the other 
States if we do not want to.

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