Washington lawmakers optimistic on sales tax deduction

06:59 AM PST on Friday, December 8, 2006

Associated Press
King 5 News

WASHINGTON, D.C. - Washington state lawmakers were optimistic as congressional negotiators reached agreement on a massive tax and trade package that includes a provision allowing state residents to deduct state sales taxes from their federal income tax returns.

A House vote on the complex bill had been anticipated late Thursday but was rescheduled for Friday, with a vote in the Senate after that.

Washington is one of eight states without an income tax that could lose the ability to deduct state sales tax from their federal returns if the law is not renewed.

Passage of the mammoth measure - which would extend a host of tax breaks and normalize trade relations with Vietnam - was far from certain. Under Senate rules, a single senator can force days of delay once a bill comes over from the House.

"It's no better than 50-50 right now," said Senate Minority Leader Harry Reid, D-Nev.

Sens. Maria Cantwell and Patty Murray and Rep. Brian Baird, all Washington Democrats, urged their colleagues to approve the bill. Both the House and Senate were scheduled to adjourn for the year on Friday.

"This package of important tax provisions for Washington's middle class, like the state sales tax and college tuition deductions, should be able to pass the Senate in the next few days," Cantwell said Thursday in a statement. "We need this to get done before Congress adjourns for the year so that we can start letting Washingtonians know that they will be able to take advantage of this vital deduction on their 2006 and 2007 taxes."

Cantwell and other lawmakers called it unfortunate that the sales tax provision was not renewed before the Internal Revenue Service sent federal tax forms to the printers, but they said they would work hard to publicize the sales tax deduction before residents begin filing their tax returns next spring.

"The state sales tax deduction is extremely important for Washingtonians, and quite simply saves middle class families money that they can then pump back into our economy," said Baird, who worked with Cantwell, Murray and other lawmakers to adopt a two-year sales tax deduction in 2004.

That is the measure that is set to expire Dec. 31 if Congress does not act - an outcome Baird, Cantwell and Murray called unacceptable.

Looking forward, Baird said the new Democratic-controlled Congress should work to make the sales tax deduction permanent, "so we're not waiting until the 11th hour every year to bring relief to working men and women in Washington and throughout the country."

The tax deduction is estimated to have saved Washingtonians more than $500 million last year - or about $500 per family.