Mr. Speaker, I yield such time as he may consume to the gentleman from Georgia (Mr. Scott) for a brief personal privilege matter. (By unanimous consent, Mr. Scott of Georgia was allowed to speak out of order.) Mourning the Passing of…
Mr. Speaker, I yield such time as he may consume to the gentleman from Georgia (Mr. Scott) for a brief personal privilege matter.
(By unanimous consent, Mr. Scott of Georgia was allowed to speak out of order.)
Mourning the Passing of Gloria Aaron
Mr. Speaker, I yield myself such time as I may consume.
(Mr. FROST asked and was given permission to revise and extend his remarks.)
Mr. Speaker, I am pleased to join the gentleman from Texas (Mr. Sessions) today in support of H.R. 4275, legislation to make the expanded 10 percent tax bracket permanent. In my district in north Texas and across America, scores of families work hard every day to make ends meet. By passing this bill, we will provide some much-needed tax relief to these hardworking Americans.
But I must admit, Mr. Speaker, I find it very odd that some Members of this House would champion the tax relief bill before us today when they have also at nearly every opportunity voted against other measures that would have provided significant economic benefits to a great many middle-class taxpayers. I am talking about measures like providing additional tax relief by reinstating the State sales tax deduction and ensuring overtime pay for America's police and firefighters.
I think it is important to consider these sorts of measures now, Mr. Speaker, because many of our constituents are suffering from the recent recession and the outsourcing of good American jobs overseas.
Do not get me wrong, Mr. Speaker, we all want to provide tax relief to our constituents. I voted last week in favor of the bill to provide relief from the Alternative Minimum Tax. I voted the week before to permanently eliminate the marriage tax penalty, and I will vote today to make the expanded tax bracket permanent. The bill on the floor today is a good bill and it is the very least we can do to help families in the country, but I think the American people deserve better than our least effort.
Others may be happy to limit our efforts to help American families to this bill, but I am not, Mr. Speaker. We can improve this bill by amending the rule to allow for the consideration of H.R. 720, a bill introduced by the gentleman from Texas (Mr. Brady). His bill will reinstate the sales tax deduction so that citizens of States without income taxes may deduct their sales taxes from their Federal tax bill. This is a very important issue for many Americans, including my constituents in North Texas who do not pay a State income tax but have been plagued by high sales taxes which may rise even higher if some in the Texas legislature have their way.
Our State comptroller has estimated that the average Texas family would save about $300 a year on their Federal taxes under the bill offered by the gentleman from Texas (Mr. Brady).
Last week, I attempted to bring a similar measure up for consideration, but that effort was defeated on a straight party-line vote.
This is a bipartisan issue, Mr. Speaker, and I want to give the entire House an opportunity to vote on a bipartisan bill. H.R. 720 has 78 cosponsors, 47 Republicans and 31 Democrats. I have cosponsored the bill, the gentleman from Texas who is managing today's rule on the other side of the aisle has cosponsored the bill, and dozens of other well-respected Members from both parties have cosponsored the bill. As a matter of fact, Mr. Speaker, the Republican leadership indicated last week that they too support this bill.
So why do we not vote on it? Is this about politics, or is it about tax relief? Last week, Republicans defeated my amendment and said it was about politics. Well, here is a Republican bill that has strong bipartisan support and will provide millions of families with $300 a year in tax relief.
The American people deserve to find out today whether the majority party will put partisan politics aside for just a minute to pass this badly needed tax relief. I bet our constituents just cannot wait to see how their elected Representatives will vote on this issue.
In the coming weeks, I hope we will have more opportunities to help more families. But in the meantime, if Members are serious about helping their constituents, they will not only vote to extend the 10 percent tax bracket permanently, they will also vote today to defeat the previous question and allow us to consider H.R. 720, to reinstate the sales tax deduction. It is a Republican bill with Democratic support. As my colleagues realize, a no vote will be a vote against tax cuts.
Mr. Speaker, at this point I would like to insert several things in the Record. I am inserting a special report from Carole Keeton Rylander, the Texas Comptroller of Public Accounts. In this report she says, ``Restoration of the IRS sales tax deduction should be one of Texas' main priorities in Congress. The current discriminatory treatment of Texas taxpayers is taking $701 million out of Texas pockets and costing our State more than 16,000 jobs.''
I would also at this point, Mr. Speaker, insert in the record a statement by my colleague, the gentleman from Texas (Mr. Brady), that he presented when he introduced this legislation. ``Washington should treat all States equally,'' Mr. Brady says. ``A broad bipartisan group pushes Congress to end bias against sales tax States.''
[Special Report, March 2002]
Restoration of the IRS Sales Tax Deduction Should Be One of Texas'
Main Priorities in Congress
(By Carole Keeton Rylander)
Currently, the citizens of Texas and eight other states
are discriminated against because they cannot take any tax
deduction comparable to the state and local income tax
deductions enjoyed by the citizens of 41 other states and the
District of Columbia. In an attempt to alleviate this
disparity, Comptroller Rylander proposes to restore much of
the federal sales and motor vehicle sales tax deductions that
citizens of Texas were last able to itemize on their federal
income tax returns for the 1986 tax year.
The Comptroller's plan would grant taxpayers in all states
the option of deducting either their state and local sales
and motor vehicle sales taxes or their state and local
individual income taxes on their Form 1040. While such an
option would not fully restore the original deduction, which
allowed deductions for sales as well as income taxes, it
would go a long way to restoring fundamental equity for
taxpayers in those states that no not impose income taxes on
their residents, and at minimal cost to the federal budget.
There is already legislation before Congress that closely
tracks the Comptroller's plan. Last year, Representative
Brian Baird (D-Washington) introduced H.R. 322, and Sen. Fred
Thompson (R-Tennessee) introduced a similar bill, S. 291, in
the Senate. Both bills would grant taxpayers in all states
the option of itemizing a deduction for either their sales
(including motor vehicle sales) taxes or income taxes paid,
but not for both. Both bills would limit the deduction to a
specific amount prescribed in a table (individualized for
each state) providing deductible amounts by family size and
income group. Taxpayers, however, would not have the option
of deducting actual taxes paid, as they had in 1986 and
before. The main difference between the bills is that H.R.
322 refers to state sales taxes, while S. 291 refers to state
and local sales taxes. The Senate version also would allow
the deduction against the Alternative Minimum Tax. H.R. 322
boasts among its 58 co-sponsors 18 Texans; S. 291 is co-
sponsored by both Texas senators.
Texans lost their sales tax deductions in the last-minute
deal-making behind the Tax Reform Act of 1986. Before passage
of the Tax Reform Act of 1986 (TRA86), all individuals were
allowed to take separate income tax deductions for their
payments of state and local sales taxes and motor vehicle
sales taxes. For the sales tax, they were allowed to deduct
either the actual amount paid, or they could use an optional
sales tax table that provided deductible amounts for each
state (based on its rate and base) by income group and family
size. For example, a family of four with an income of $33,000
was allowed to deduct $306 in state sales taxes in Texas, but
$508 in Tennessee; and in both instances, taxpayers were
allowed to include an additional amount for local taxes paid.
TRA86 was designed to simplify the federal income tax by
eliminating many deductions, exemptions and credits while
increasing personal exemptions and standard deductions and
lowering and compressing tax rates. The deduction of state
and local sales taxes was one of the last (and most
contentious) items considered by the Senate, but the final
efforts to restore at least some vestige of the deduction,
led in part by Sen. Phil Gramm, ultimately failed. The
argument put forth by members from the states that retained
their state and local income tax deduction was that the
losses attributable to the repeal of the sales tax
deduction would be more than made up for by the increased
personal exemption, and that the sales tax deduction only
benefited the rich, because lower-income groups are less
likely to itemize.
The Comptroller's plan could be put in place for less than
1 percent of the costs of existing state and local tax
deductions. The March 26, 2001 cost estimate provided by the
Joint Committee on Taxation estimated that H.R. 322 would
decrease federal receipts by $23.1 billion over the 10-year
period 2002-2011. The annual costs were expected to average
$2.0 billion for the first three years, rising incrementally
thereafter. Putting the federal cost in perspective, the 1999
cost for the current deduction for state and local income and
property taxes was $268.9 billion. As such, reinstatement
would produce an increased cost to the federal government of
0.8 percent.
The Comptroller's plan could be put in place with virtually
no increase in complexity. Although the sales tax deductions
were eliminated in part for reasons of tax simplification,
the proposed legislation before Congress would add only one
more line to Schedule A, for those taxpayers electing to
itemize on their Form 1040. Even if actual taxes paid were
allowed to be deducted there would be an addition of only two
lines: one for general sales taxes paid, and one for motor
vehicle sales taxes paid.
Equity and fairness demand that tax discrimination against
Texans be eliminated. Reinstatement of the deduction for
sales taxes would eliminate the fundamental disparity created
by TRA86, when citizens in states with a personal income tax
were permitted to deduct such taxes, but citizens in states
without an income tax had no corresponding deduction. The net
effect of this disparity is that Texans, as well as the
citizens of the eight other states without a general
individual income tax pay a greater percentage of taxes to
the federal government than do citizens living in their
neighboring states with income taxes. In other words, the
federal tax law currently treats the same individual
differently solely on the basis of residence. Providing
individuals in all states the choice to deduct one or the
other of their sales or income taxes would restore equity and
fairness for all U.S. citizens at minimal cost.
The Comptroller's plan would put more money in Texans'
pockets. As with everything else in the IRS Code, the devil
is in the details, and even subtle differences in proposed
legislation can have major revenue implications, making any
revenue estimates of the ultimate legislation difficult.
Assuming that the federal legislation fairly and accurately
portrayed Texans' sales tax and motor vehicle sales tax
payments, restoration of the sales tax deduction could be
expected to save Texans--in the aggregate--on the order of
$568.7 million (if only state sales taxes were exempted) to
$701.3 million (if state and local sales taxes were exempted)
in the 2002 Tax Year. The corresponding average savings per
itemizing Texas household would be $231 and $284.
While the deduction only would go to taxpayers who itemized
their deductions, more Texans at lower income levels would
find it to their benefit to itemize. Right now, only one in
five tax returns filed by Texans itemizes deductions,
compared to almost one in three nationwide. The chief reason
for this is that citizens of 41 states and the District of
Columbia enjoy a deduction that is not available to Texans.
Restoration of the deduction for sales taxes paid would go a
long way towards bringing Texas closer to the national
average. In other words, the availability of the deduction
would benefit not only those who currently itemize, but an
additional number of slightly lower-income households that
would find it to their benefit to itemize.
The Comptroller's plan would create more jobs, economic
growth, and state tax receipts with absolutely no state tax
or spending increase. Keeping as much as $701.3 million in
the hands of Texas taxpayers would provide a significant
boost to the state economy. Assuming that the legislation
passed this year and that the deduction could be taken on
income taxes filed in 2003 for the 2002 Tax Year, the tax
savings could be expected to generate 16,180 new Texas jobs,
$590 million in new Texas investment, and $874 million in
increased Texas Gross State Product in 2003. The increased
economic activity in turn could be expected to boost general
revenue by $66.5 million in the three-year period 2003-05.
Most of this revenue would come from increased sales and
motor vehicle sales tax collections.
The Comptroller's plan promises a win-win situation for all
Texans, even those who do not itemize. To the extent that
keeping more Texas income in Texas, where it belongs, instead
of sending it off to Washington, all Texans would benefit
from the increased employment opportunities and investment.
In fact, it is difficult to find a downside for Texas to the
reinstatement of the sales tax deduction.
The Comptroller's plan would be a straight-up win for the
state, a victory for tax equity among the states, and it
would provide a desirable, welcome boost to restoring
statewide economic and revenue growth.
salient features
Legislation tracking the Comptroller's plan would cost the
federal government somewhere between $2.0 to $2.5 billion per
year--less than 1 percent of the $268.9 billion 1999
deduction for state and local income and property taxes.
Texans would save as much as $701 million, or $284 per
itemizing household on their 2002 taxes.
The estimated tax savings would be expected to generate
16,180 new Texas jobs, $590 million in new Texas investment,
and $874 million in increased Gross State Product in 2003.
The increased economic activity could be expected to boost
2003-04 general revenue-related state tax receipts for the
three-year period 2003-05 by $66.5 million.
Assuming that the federal legislation fairly and accurately
portrayed Texans' sales tax and motor vehicle sales tax
payments, a family of four with an income of $60,000 would be
able to deduct an additional $1,015 to calculate taxable
income, and a single mother of one with a total income of
$35,000 could deduct an additional $641.
The current system discriminates against Texans and the
citizens of other states that have opted to finance their
budgets without personal income taxes. The Comptroller's plan
is necessary to restore fairness and equity in the treatment
of those state taxpayers who currently do not benefit from
the tax deductions enjoyed by the citizens of the other 41
states and the District of Columbia.
Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, it is interesting, my colleague from Texas talks about the legislation and, well, we will do that in all due time and all due course, in terms of the righting of the wrong that was committed 18 years ago. The sales tax deduction for my State and for six other States, it is not 17, it is 7, was eliminated by this Congress in 1986, 18 years ago.
Only a few bills come out of the Committee on Ways and Means, only a few favored bills, so we have to take the opportunity to present this very important piece of legislation on the floor today and to give the House an opportunity to vote to right this wrong on the question of the deductibility of State sales tax. There are no other opportunities to present this to the House. That is why we are presenting it today. I hope that the House will give us the opportunity to right that wrong.
Mr. Speaker, I yield 5 minutes to the gentleman from Washington (Mr. Baird).
Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, we have a good piece of legislation before us today that I intend to support. I think most Members of the House will support it. My only request is that, at the same time, we provide equity and justice to the residents of seven States who were denied that equity and justice in 1986.
Now, I know my colleague is a relatively junior Member and was not here in 1986 when that legislation was voted on, but I was here, and I voted against the legislation that denied the residents of my State the opportunity to deduct their sales tax, when residents of New York and California and other States could deduct their State income tax.
I feel very strongly about this issue, Mr. Speaker. As Members of this House, we can do so much to lend a helping hand to our constituents. Today we have a chance to do something good for millions of American families. We can pass the bill to make the extended 10 percent tax bracket permanent, and then we can also immediately consider the Brady legislation, H.R. 720, to restore the sales tax deduction for citizens of Texas, Florida and other States lacking a State income tax.
Now, as I mentioned earlier, last week I attempted to bring to the floor a similar bill to reinstate the sales tax deduction, but the Republican leadership indicated a preference for the Brady bill. So now we have a chance to consider the legislation that Republicans preferred. It does not matter to me which bill we consider. This is a bipartisan issue, with wide support on both sides of the aisle.
I just want to get it done.
So today, Mr. Speaker, to get it done, I urge a ``no'' vote on the previous question. If the previous question is defeated, I will offer an amendment to the rule that will allow the House to vote on H.R. 720.
Let me be clear, Mr. Speaker. Voting ``no'' on the previous question will not prevent this House from voting on the underlying bill. It will simply allow for the consideration of H.R. 720. A ``yes'' vote, however, will deny the House the chance to even consider the issue of reinstating the sales tax deduction.
The American people deserve to know where their elected representatives stand on the issue of restoring the sales tax deduction. This is not a partisan issue, and this is not a political issue. This is about whether the citizens of Texas and other States should have to pay for the privilege of living there. I hope Members realize it today, and I hope their votes reflect this as well.
I urge a ``no'' vote on the previous question and ask unanimous consent that the text of the amendment be printed in the Congressional Record immediately before the vote.
Mr. Speaker, I yield back the balance of my time.
Mr. Speaker, I object to the vote on the ground that a quorum is not present and make the point of order that a quorum is not present.