GOP push to reward states that have no state income tax on the rich

[papau]

GOP push to reward (albeit for only next 2 years) states that have no state income tax on the rich - and finance with only a State sales tax on the middle class and poor - as they add yet again more generous tax benefits for corporations like The Boeing Co. and Microsoft Corp. (a drop in tax rate from 35 percent to 32 percent plus a bring home prior earnings carrying a deferred tax of 35% and only pay 5.25 percent in taxes for one year), and a "greater of" state sales tax deduction to a bill that whose "real purpose" is to fix the illrgal export credit rules we now have. And since you do not deduct both State income and state sales, just the higher, the reward is for Washington, Florida, Nevada, South Dakota, Texas, and Wyoming, who are all so nice that they do not tax the income of the rich.


http://seattlepi.nwsource.com/local/176555_taxes05.html

Saturday, June 5, 2004

Bill might save you up to $500 a year
Plan would let state's residents deduct sales tax

By CHARLES POPE
SEATTLE POST-INTELLIGENCER WASHINGTON CORRESPONDENT

WASHINGTON -- The House yesterday offered legislation that would allow people to deduct sales taxes from their federal income taxes, setting the table for an election-year gift that could save the average Washington resident $300 to $500 a year.

The provision is part of a larger $34 billion tax cut bill introduced by House Republicans that also carries benefits for major exporters such as The Boeing Co. and Microsoft Corp.

Though it was a small part of the larger 10-year tax-cut bill, the sales tax provision is certain to draw the most notice in Washington state. The foundation of the bill, however, revamps corporate tax laws in an effort to end tariffs European countries have slapped on U.S. goods in a trade dispute.<snip>

Baird, along with other Democrats, insisted that the Democratic alternative would provide more tax relief for Washington state residents. The tax breaks, he said, would be permanent and it would provide relief to the 50 percent of Washington taxpayers who itemize.<snip>

....including exempting broad-based stock options from payroll taxes and more generous expensing....some relief from the alternative minimum tax.. Bonus depreciation provisions were included for some aircraft manufacturers... extended through 2005 ...the research-and-development tax credit...<snip>

[ewagner]

1. They. Never. Quit.

When your policies are an obvious failure, why, of course, there's only one thing to do......MORE OF THE SAME!

[Doctor Smith]

2. Actually, wouldn't this be good for low income earners in other States?

Since most people with low incomes pay no income tax, wouldn't they then get to deduct their sales taxes?

[papau]

3. NO - not good for low income since a credit against a tax you don't pay is

worthless.

Now it could be made useful to the poor by making it refundable - you owe zero Fed tax, have sales tax credit of $300 - and the Fed sends you 4300 over and above refunding any income tax that may have been withheld from your pay..

But do not hold your breath waiting for the GOP to use this structure in any Tax Bill they write. Indeed they want to kill this structure as it exists in the current Earned Income Tax Credit for the poor. Hard enough to just defend EITC from the GOP - I doubt the Dems are up for a battle to make this idea refundable also - besides they can not win that battle at this time.