Start keeping your receipts – all of them
A bill to allow Tennesseans and residents of seven other states to deduct sales tax for federal income tax purposes is hitting snags:
”Senator Frist is a co-sponsor of sales-tax deductibility legislation, and now that the House has acted, he is hopeful that Democrats will support our efforts to go to conference,” Smith said.
Frist and Sen. Lamar Alexander said they would lobby Senate colleagues to accept the deductibility provision.
”This is a matter of simple fairness since citizens in other states are allowed to deduct their state income tax payments,” Alexander said.
Matter of fairness? Doesn’t Tennessee receive more federal funds than it pays? Don’t get me wrong, I’m all for tax cuts of any kind, but this likely doesn’t have a snowball’s chance in Hell of passing.
And can you imagine the record keeping involved? Digging up receipts from the grocery store, gas, etc.?
June 29th, 2004 at 5:26 am
You used to be able to deduct sales tax. It was based on tables, which I believe were tied to income. No need for proof, etc., althought I think there was a provision to deduct based on documented actual sales tax paid as an alternative.
June 29th, 2004 at 5:28 am
That’s good because otherwise it’d be tough. I guess using actual is good if you made large purchases (like cars).
June 29th, 2004 at 5:33 am
Cars would be the biggest, but don’t forget stereo equipment, TVs, computers, furniture, and, oh yeah, GUNS. 😀
Now here’s my question: I’m a legal resident of WA, which doesn’t have an income tax. But, thanks to the Army, I live in SC, which does. But I don’t pay SC taxes, other than sales tax. Can I deduct my SC sales tax, or just the tax in my home state?
June 29th, 2004 at 8:00 am
Not really. Residents of other states can’t deduct their sales tax, either.
June 29th, 2004 at 8:02 am
I am not nor have I ever been a resident of TN, but “getting more federal funds” than paying in can be quite misleading.
People don’t usually head to Minnesota to retire & collect their social security bennies, nor are the majority of military bases located in the blue states. The south is hotter (retirement communities) and the shorelines allow for plenty of military bases & contractors.
June 29th, 2004 at 9:26 am
tgirsch makes a good point. Why not make ALL state taxes-income (already done), property (ditto), sales, and whatnot, deductable on federal taxes?
NOTE: Personally, I prefer a flat tax on all income about a specified, per-person level if we’re going to have an income tax at all. The above statement is specific to the current proposed amendment only.
June 29th, 2004 at 1:07 pm
Heartless Libertarian:
Set up properly, I wouldn’t object to this. I would still ask that we keep a standard deduction, however, to account for the poverty level. Make it something like $10,000 per adult and $5,000 per dependent child, and tax, say, a flat 25% of what’s left. (All numbers completely arbitrary.)
Of course, this would never fly, because too many people would lose too many deductions they like. Your home mortgage interest deduction? Sayonara. Tax-free retirement savings accounts? Gone, the way of the model-T. Business expense write-offs? Goodbye. Capital loss write-offs? If they exceed your capital gains, you can’t write off the net loss, either.
Also, I’m not sure the well-to-do people would be terribly happy with all of their income (including interest, dividends, and capital gains) counting the same as wage/salary income.