Deal keeps sales tax deduction in place

Share

By Associated Press

Summary

The bill would extend a multiyear program that pays rural counties hurt by federal logging cutbacks, and would allow Washington state residents to continue deducting state sales taxes on their federal income tax returns.

Story Published: Sep 16, 2008 at 3:23 PM PST

Deal keeps sales tax deduction in place
WASHINGTON (AP) - A new tax deal reached by Senate leaders includes several major provisions sought by Northwest lawmakers.

The bill would extend a multiyear program that pays rural counties hurt by federal logging cutbacks, and would allow Washington state residents to continue deducting state sales taxes on their federal income tax returns.

The bill also extends billions of dollars in tax credits for renewable energy such as solar, wind and hydropower, as well as biomass and geothermal electricity.

Sen. Maria Cantwell, D-Wash., who led negotiations on the energy tax credits with Sen. John Ensign, R-Nev., said the credits could mean tens of thousands of jobs.

"This is a major step forward to help get us off our dependence on oil and shift over to renewable technologies like solar, wind and geothermal. That is absolutely the direction we need to go in," Cantwell said.

"It's good to turn the corner and start saying we're going to focus on doing renewables and (that) will have a major impact on the Northwest and the West generally," she said.

Cantwell, a member of the Senate Finance Committee, called the sales-tax provision a matter of basic fairness. Washington is one of at least eight states without an income tax where taxpayers faced the possibility that they could lose the ability to deduct state or local sales taxes from their federal returns.

Sen. Ron Wyden, D-Ore., called the timber payments critical to rural county governments across the West and beyond.

The timber payments, which compensate counties stung by dropping timber sales on federal land, would run through 2011, Wyden said. He also is a member of the Senate Finance Committee, which announced agreement on the tax package late Tuesday.

The deal breaks a monthslong stalemate over a tax break package that would bring billions of dollars in relief to individual and business taxpayers, developers of clean energy resources and people threatened by the alternative minimum tax.

The agreement includes some $17 billion in clean energy tax incentives and would also extend targeted tax breaks for a variety of causes, including college tuition, state and local sales taxes and research and development for U.S. businesses.

The timber payments expired in 2006 but Congress extended them for one year, helping timber-dependent counties through the 2007-2008 fiscal year.

Congress failed to renew the payments earlier this year, prompting counties in Oregon, California and other states to slash budgets and lay off hundreds of employees.

The Senate is expected to vote on the tax bill later this week. If approved, the legislation would go to the House.