As Democrats fail to act to save sales tax deductibility, Tennessee’s Republican Senators and Congressmen repeat call for preserving sales tax deductibility

NASHVILLE - With the busiest shopping day of the year coming the day after Thanksgiving, the Tennessee Republican Party and Tennessee’s Republican congressional delegation today called on Congress to extend the state sales tax deduction past the end of the year.

The sales tax deduction expires at the end of the year and Congressional Democrats who claim to favor extending it have done nothing to spare the people of Tennessee and eight other states from this impending tax increase.

The sales tax deduction was passed in 2004 thanks to the leadership of Republican lawmakers, including high-profile efforts by several Tennessee Republicans. The Republican-controlled Congress extended the deduction for two more years in 2005.

Now, Democrats are letting it expire.

Tennessee’s Republican delegation is unified in support of making sales tax deductibility permanent in the federal tax code:

Sen. Lamar Alexander said:

“Making state sales taxes deductible will put more than $400 in the pockets of nearly 600,000 Tennesseans who itemize their taxes this year. Doing so permanently is an issue of fairness for Tennesseans.”

Sen. Bob Corker said:

“This is a simple matter of tax fairness and common sense. Tennessee is fortunate not to have a state income tax, but Tennesseans should not be penalized for this on their federal tax returns. Making the state sales tax deduction permanent keeps more money in the pockets of hard-working families and it’s the right thing to do.”

Rep. John J. Duncan Jr., representing Tennessee’s 2nd Congressional District, said:

“I have worked on this issue for many years with several of my fellow colleagues in Congress and will continue to fight for the fair treatment of all Tennesseans under federal income tax law. This is very important to the people of Tennessee and I am confident that Congress will once again realize the inequity and take action to alleviate this unfair hardship.”

Rep. Marsha Blackburn, representing Tennessee’s 7th Congressional District, said:

“There are Members of this delegation that claim they oppose a tax increase on hard-working Tennesseans, but their actions prove otherwise. We are already facing the largest tax increase in U.S. history and their lack of inaction to ensure that Tennessee taxpayers don’t pay an extra $400 to the bloated federal government is inexcusable.

“It’s time for members of the new Majority to stand up for Tennessee taxpayers, instead of being a rubber stamp for the tax and spend, liberal elite currently running Congress. As a member of the Majority, I pushed through legislation that extended the sales tax deductibility. The question is — will Democrats do the same?”

Rep. Zach Wamp, representing Tennessee’s 3rd Congressional District, said:

“As the Member who originally worked with U.S. Reps. Kevin Brady and Brian Baird to set up the team to bring about the reinstatement of the sales tax deduction for Tennessee and other states, I am again fighting for this extension. I hope that a reasonable compromise can be reached here in Congress to continue the sales tax exemption before it expires on December 31,”

Rep. David Davis, representing Tennessee’s 1st Congressional District, said:

“Action is long overdue to protect the taxpayers of Tennessee. The sales tax deduction should be made permanent as a matter of fairness to ensure that Tennesseans will not have to fight this battle constantly.”

Before 1986, the tax code allowed for a sales tax deduction. When the deduction was repealed, it created an unfair disparity between states that charge income tax and the nine states that do not, including Tennessee. Without this deduction, residents in six states that don’t have an income tax would pay much more to the Federal government than individuals with comparable profiles in other states.

Here are some key facts about sales tax deductibility:

In 2004:

• 532,703 out of 2,606,931 total returns (20% of all returns) claimed the sales tax deduction

• 532,703 out of 657,196 itemized returns (an 81% rate) claimed the sales tax deduction

• Total amount claimed: $1.078 billion

• Average claim: $2023

• Average reduction in tax liability paid to the IRS: $400

• Largest group claiming the deduction were families making under $50k a year

In 2005:

• 574,393 (an increase of 42,000) out of 2,657,790 total returns (22% of all returns) claimed the state and local general sales tax deduction on their 1040s

• 574,393 out of 686,807 itemized returns (an 84% rate) claimed the sales tax deduction

• Total amount claimed: $1.23 billion (an increase of $152 million, about a 15% increase from previous year)

• Average claim: $2142

• Average reduction in tax liability paid to the IRS: $551

• Largest group claiming the deduction were families making under $50k a year

“As early as January 4 of this year, legislation was filed to make this deduction permanent but here it is late November and the average Tennessee family is about to be hit with a tax increase because of Democrats’ lack of leadership on this issue,” said Robin Smith, chairman of the Tennessee Republican Party.

“The history of the sales tax deduction is a case study in Republican leadership and Democratic failure,” said Bill Hobbs, communications director for the Tennessee Republican Party. “Republicans cut taxes for Tennesseans, Democrats increase taxes.”

### TNGOP November 20, 2007

Contact: Bill Hobbs
Communications Director
Tennessee Republican Party
615-269-4260
billhobbs@tngop.org