Posted on 10/11/2004 12:36:11 PM PDT by ijcr
Senator Nelson D-Fl stated that State Sales in the six States that do not have State income taxes will be deductible in 2004 and 2005.
This is hugh.
Probably won't mean a hill of beans to low or moderate income folks like me unless you spend more than you have in order to accrue tax payments in excess of standard deduction...just like any other "deduction," it is all a shell game. IMO.
The answer is a National Sales tax, IMO of course.
Let the flamers get started.
I think the arguement (and I'd like to see if this was addressed in the law) is that it's not equal to let 44 states that have an income tax deduct their main revenue tax but not the six other states just because they don't have an income tax.
But I see the problems in a court with this. I don't want to let every state deduct sales taxes since it, like consumer interest, was a major pillar in Reagan's tax simplification. In exchange for really, really lower rates you lost deductions. It also eliminates the social engineering aspects when deductions become a special interest ala home mortgages today.
I'd rather have NO deductions for ANY state taxes in exchange for lower federal income tax rates.
There will be tables but you are correct. They don't have enough income to make much of a difference and this deduction is on taxable income. It's not a tax credit.
But the idea that the "poor" won't be helped is not a good arguement since they, being poor, don't have enough income to benefit from any tax cut unless it's in FICA. But the problem there is the majority of the poor (the truly poor, not the statistical poor based on government definitions) probably need to pay into FICA since they'll be more than likely the ones needing Soc Sec and Medicare. For the rest of us those are just income redistribution programs.
Not in the states that I've ever filed for.
And not on the federal 1040 return.
In the same bill Senator Nelson proposes to increase the IRS workforce by 180,000 in order to check each and every receipt that is submtted when applying for this deduction.
Agreed. State/local jurisdictions grab your money with a combination of income, property and sales tax. If your state uses property and sales tax only, then 100% of your tax burden is now deductible. If your state uses all three, then only the income and property tax is deductible.
The rule should be that ALL of these taxes are deductible for ALL residents of ALL states.
Thanks for the ping!
Someone will come up with a receipt reader that will store all of your taxes paid. Technology will come up with the answer.
Yes. You would have to save every receipt. My mom used to do it, and keep them all organized like a good little OCD'er. She had a friend who kept them all in a garbage bag, and when she got audited one year and the auditor questioned her sales tax deduction, she went in to see the IRS auditor and dumped the contents of the bag out on his desk. He caved.
more fiddling while Rome burns.Rearrange the Titanic's deck chairs how you will, it's still going down.
I'll cheer when they pass the Fairtax.
Cuyahoga County, home of Cleveland, OH has sales tax of 8% (6 state, 2 county) plus property taxes, plus income taxes....
No only serious....
The way the new sales tax deduction works is that you will be allowed to choose to take EITHER the state income tax deduction OR the state sales tax deduction, but not both. Therefore, as a practical matter it will mainly help people in the states that have a sales tax but no income tax. But it is technically constitutional because the rule is applied equally in all the states.
The package also provides benefits for a wide range of groups, from native Alaskan whalers, importers of Chinese ceiling fans, NASCAR race track owners and residents of states without state income taxes, who would be able to deduct state and local sales taxes from their federal tax returns.
Arrgh! Noooo! That's what the taxers argued here in TN when they tried to impose a state income tax on us. Fortunately enough folks realized that the slight reduction in our federal income tax would be more than offset by the hugh income tax about to be imposed on us. Now that we can deduct our (high) state sales tax, that argument is gone, helping to keep TN income tax (at least on wages) free.
I am surprised at Freepers seeming to buy into the line that if some get a tax deduction it hurts those who do not. Remember, it's our money! It does not hurt me in the slightest if you get to keep more of your own money.
to be honest, I don't really oppose it. I only said that because the political issues would not be good - sure it would be great for Florida, but people in other states would feel it was a political move to buy votes there.
what is really needed is a package that combines state income, property tax, and sales tax into one sum - and apply the deductability along some sliding scale. so you reach some maximum deduction, effectively so that residents with high state income and property taxes never get to "use" the sales tax deduction because it pushes them past the exclusion limit - while people in other states without the income tax who currently get nothing, can use it.
Its easier to sell on the fairness issue that way. and it also appeals to people who rent apartments and pay no property tax - even in states like NY, they could then use the sales tax they pay towards the cutoff point.
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