Editorial: In Our View: A Triumph for Fair Taxation

By:  Editorial Board
Source: The Columbian

Wrapped into the massive tax-and-spending bills approved by Congress last week is a small item that represents a big victory for Washingtonians.

After years of urging from Sens. Maria Cantwell and Patty Murray, the give-and-take deal makes permanent a provision that allows Washington residents to deduct sales tax on their federal tax returns. As one of eight states that does not have income tax — along with Alaska, Florida, Nevada, South Dakota, Tennessee, Texas and Wyoming — Washington long has been in a position that unfairly penalized its citizens.

Since the 1986 overhaul of the U.S. tax code, residents in states with income tax have been allowed to deduct that from their federal taxes. But those in states where sales tax is designed to make up for the lack of income tax were out of luck. Since 2004, Congress has allowed sales tax to be deducted, but the provision required annual approval, leading to uncertainty for Washington residents. Now that deduction has been made permanent, rather than being treated as a bargaining chip.

“By making the state sales tax deduction a permanent part of the tax code, we end the long-term inequity for Washington taxpayers and provide certainty for the 25 percent of Washington tax filers who claim this deduction,” Cantwell said. “This bipartisan legislation helps working families and our economy — it means an average of more than $600 back in the pockets of Washingtonians.”

The matter was a question of fairness. Congress could raise taxes for residents of 42 states by eliminating the income-tax deduction, or lower taxes in eight states by extending the sales-tax deduction. Political expediency dictated which course lawmakers would take, and yet the issue offers some insight into why Washington, D.C., is operating at a perpetual deficit. The sales-tax provision is part of a bill that packages together tax breaks worth some $560 billion over the next 10 years.

At the same time, Congressional members agreed to a $1.1 trillion spending bill that represents bipartisan compromise and avoids a year-end government shutdown. Politically charged riders such as defunding Planned Parenthood or gutting the Environmental Protection Agency were dropped in exchange for concessions that appease those who favored the provisions — such as lifting a 40-year-old ban on the export of crude oil. The results represent a mixed bag. As The Washington Post wrote editorially: “Aside from avoiding a government crisis, though, the best that can be said about the package is that it mixes a few genuine policy achievements with some astonishing — if bipartisan — legislative irresponsibility.”

Among the concerns is a provision that delays implementation of the Affordable Care Act’s “Cadillac tax” on high-cost employer health plans. The “Cadillac tax” is important to the economic feasibility of the Affordable Care Act, and its delay reflects a new Republican strategy for attacking the health care law: Death by a thousand paper cuts. If critics are unable to scuttle Obamacare as they have been trying to do for five years, maybe they can make it teeter by altering the cost controls included in the law.

Such are the problems inherent with bipartisan compromise — and yet those problems remain preferable to the inaction that has marked Congress in recent years. It is disappointing that the bar has been set so low that any big agreement is hailed as a big achievement, but that is the point at which we have arrived — taking solace in small victories.