Fiscal cliff deal includes Wash. sales-tax break

The Olympian - Brad Shannon

U.S. Sen. Maria Cantwell says the "fiscal-cliff" tax bill that passed by a vote of 89-8 early this morning includes the sales-tax deduction for taxpayers in Washington and a half-dozen other states. Cantwell had said the deduction, which covers 2012 and 2013 returns, would be a top priority for her after the November election.

The tax break has previously been estimated to have a value of up to $500 million yearly to state taxpayers, who are unable to deduct state income taxes because Washington does not tax income. Cantwell said the deal should save 850,000 taxpayers who itemize their income tax returns about $500 on average.

That said, most Washington residents face have higher outlays as a result of the overall cliff package, simply because the temporary 2 percent cut in payroll taxes for Social Security is not included in the deal. The Washington Post has details of the brokered agreement here, and the whole shebang goes to the U.S. House for a possible vote in the next few days.

Without passage, a combination of $600 billion in tax increases and spending cuts take effect. This link has background.

Cantwell, a Seattle-area Democrat who won her third term in November put out a news release early today that says several other tax breaks for veterans, students, and clean energy are included in the agreement:

WASHINGTON, D.C. – Today, U.S. Senator Maria Cantwell (D-WA) released the following statement after the U.S. Senate reached an agreement to avert the fiscal cliff. The bill, which passed the Senate early Tuesday morning by an 89-8 margin, will prevent income tax increases for middle-class families. It now heads to the U.S. House for consideration.
Senator Cantwell announced Tuesday that the bill would extend the state sales tax deduction for two years, covering calendar years 2012 and 2013. Without an extension, Washington residents would no longer be able to claim the deduction when they file taxes this April.
For 2009, the most recent year of published IRS data, nearly 850,000 Washingtonians took advantage of the state and local sales tax deduction for an average tax savings of nearly $500 per filer. Tuesday’s agreement would also extend other key tax credits that Cantwell has championed, including the Returning Heroes and Wounded Warriors Work Opportunity Tax Credit, the New Markets Tax Credit, the Low-Income Housing Tax Credit, the Research and Development Tax Credit, and tax credits for clean energy production.
“This bill protects middle-class families from income taxes going up, and provides certainty for Washington state taxpayers and businesses by extending the state sales tax deduction for two years,” Cantwell said. “Extending the state sales tax deduction puts an average of $500 back in the pockets of 850,000 Washington tax filers. This bill also extends crucial tax credits for hiring returning veterans, building affordable housing and producing clean energy.
“While I remain disappointed by the gridlock in Washington D.C., this bipartisan agreement is a step in the right direction to maintain predictability for businesses and middle-class families. Moving forward, both parties need to work together to avoid the arbitrary cuts of sequestration and to provide greater certainty for our economy.”

Stay tuned for the House votes.