October 27, 2004

The "Shiniest Bullet"

I haven't written much on the new law that will allow for the deduction of sales tax from the Federal Income Tax Return, but it's better late than never.

The Tennessean had an article about it this past weekend:

As he pushed his new $888 television set out of the showroom yesterday, Michael McGregor said he had no idea he could deduct $82 in sales taxes on the set from his federal income tax return next year.

The Nashville man is among the Tennessee taxpayers who qualify for the new tax break signed into law yesterday. People can get the break only if they itemize deductions on their tax returns, something that about one-fourth of the state's 2.5 million taxpayers have done in past years.

This is actually huge news for people who have been against an income tax being enacted in Tennessee. What's really great about this is seeing pro-income tax groups (such as the liberal Tennesseans for "Fair" Taxation (TFT)) come out against the deductibility of sale taxes. Why? The Nashville Scene spelled it out quite nicely when they lamented on the new law a couple of weeks ago:

Say Goodbye to Tax Reform

For years, Tennessee tax reform proponents have relied on a number of arguments to support their cause. They've said that the state sales tax, which accounts for most of our revenue, is subject to too many ups and downs. They've said that to have an equitable tax system, the pain should be spread across many different areas—income, property, sales, business. And they've said that the current system of taxing sales and not income has cost Tennesseans hundreds of millions of dollars. That's because, unlike a state income tax, state sales taxes can't be deducted from federal income taxes.

It's that final argument that has been the tax reformers' shiniest bullet. This week, Congress destroyed it.

Yes indeed...that "shiniest bullet" has been destroyed.

So, where has that left income tax supporters? Contradicting themselves...that's where. You would think they would be happy because one of the arguments they used against the sales tax was that it couldn't be deducted. Now that the sale tax is deductible (thanks to our representatives in the House and Senate in Washington), they decry the law because they think it's unfair!

Tennesseans for Fair Taxation (TFT) issued a statement opposing the sales tax deductability because it would only worsen an already unjust tax system by giving additional tax breaks to those who need it the least... in states that already have the most inequitable systems.

No, they don't oppose it because it's "unjust"...they opposed it because it would sink any future ideas of an income tax in Tennessee.

All I have to say to that is...too bad. Now have a coke and a smile.

Comments:

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Prediction: Citing the federal tax deductibility of state sales tax, the Tennessee legislature raises the sales tax in the next 2-3 years.

Posted by: Roboto at October 28, 2004 10:04 AM

Unless Naifeh is defeated and the GOP gains a majority in the senate.

http://tinyurl.com/69k6y

Posted by: Blake at October 28, 2004 10:55 AM