On Floor, Cantwell Calls for Senate to Pass Extension of Key Tax Credits
On Jan 1, state sales tax deduction, transit benefit, veterans hiring tax credit will expire
WASHINGTON, D.C. – In a Senate floor speech today, U.S. Senator Maria Cantwell (D-WA) called for Congress to extend key tax provisions that help create jobs and provide certainty for businesses in Washington state and across the country. Cantwell joined a number of her colleagues to urge the Senate to take up and pass the Tax Extenders Act of 2013, which would extend tax provisions that expire at the end of 2013.
“At New Year’s, as the ball drops in Times Square, a number of tax provisions are going to expire,” Cantwell said. “The lapse of these important tax provisions makes it harder for Americans to invest in clean energy, to hire veterans, to pay for public transportation, and to build low-income housing.”
Among the tax provisions expiring on December 31 is the state and local sales tax deduction, which enables Washingtonians to deduct their state sales tax on their federal tax returns.
A recent Pew Charitable Trusts report found that Washington was the state that used the deduction the most with the average filer receiving a $604 deduction. For 2010, the most recent year of published Internal Revenue Service (IRS) data, more than 950,000 Washingtonians utilized the state and local sales tax deduction and reduced their taxable income subject to federal income tax by more than $2 billion.
On January 1, 2013, with Cantwell’s leadership, Congress reached an agreement to extend the state sales tax deduction as part of the deal to avert the fiscal cliff. Due to this agreement, Washington state taxpayers can deduct sales tax for their 2013 taxes, to be filed by April 2014.
However, the deduction will expire for tax year 2014, unless Congress acts. Cantwell has been a leader in extending the sales tax deduction, and has introduced a bill this year to make the deduction permanent.
“Every year millions of Washingtonians have to wait to find out whether the sales tax deduction is going to be extended,” Cantwell said today. “I want to make it permanent and I hope that when we do tax reform we will be able to do this. But in the meantime we’ve got to give the certainty to taxpayers in Washington state.”
Cantwell was joined on the floor by Majority Leader Harry Reid (D-NV), Senators Robert Menendez (D-NJ), Sherrod Brown (D-OH), Charles Schumer (D-NY), Debbie Stabenow (D-MI) and Ron Wyden (D-OR).
A number of other provisions crucial to Washington state are set to end as well. These include the tax rate for the Low-Income Housing Tax Credit, the Veterans Opportunity Tax Credit that has helped Washington veterans find work and the New Markets Tax Credit used to invest in key projects supporting job growth.
“Across Washington state, we’ve seen first-hand how the other tax extenders help actually create an environment of certainty and predictability for jobs and job creation. These are bipartisan principles that we can all get behind,” Cantwell said. “The time to act is now.”
In her speech Cantwell cited the commuter transit benefit used by more than 1,600 employers in King County to get workers to and from their jobs. On January 1, the tax benefit for King County employees who use public transportation will drop in half – from $245 to $130 per month.
“Transportation is the second-largest expense in American households,” Cantwell said. “American families should be able to choose whether to drive or take public transit – and they shouldn’t be punished because they are taking a bus, or ferry or train.”
Watch a video of Senator Cantwell’s floor speech here.
Senator Cantwell’s remarks as delivered follows.
Mr. President, I want to thank Leader Reid, Chairman Baucus, Senator Schumer, Senator Stabenow, Senator Wyden, Senator Brown and Senator Menendez all for coming to the floor to talk about this important issue of tax extenders – and why we need to get them done now.
In the state of Washington, taxpayers are opening the morning newspaper to find the Seattle Times editorial: 'Congress should extend the sales-tax deduction.'
The Seattle Times has been following this issue for years and knows that taxpayers are waiting to find out if we can continue to deduct our sales tax from our federal income tax obligation. Being a state that doesn’t have an income tax, we want parity with other states and we want to be able to deduct our sales tax from our federal tax obligations.
Every year millions of Washingtonians have to wait to find out whether that particular tax provision is going to be extended. I want to make it permanent and I hope that when we do tax reform we will be able to do this. But in the meantime we’ve got to give the certainty to taxpayers in Washington state on these important tax policies, that Congress can act and get things done.
I’d like to submit for the record that particular editorial.
At New Year’s, as the ball drops in Times Square, a number of other tax provisions are going to expire. And the lapse of these important tax provisions make it harder for Americans to invest in clean energy, to hire veterans, to pay for public transportation, and to build low-income housing.
Like my colleague Senator Brown was discussing, the Tax Extenders Act of 2013 is about providing predictability and certainty to citizens and to American businesses about our tax benefits and investments. On January 1st, the Commuter Tax Benefit will expire. That means an increase in household expenses for 2.7 million public transit commuters.
In King County, the county that Seattle is in, more than 1,600 employers use the Commuter Tax Benefit to enable employees to get to and from work. If you’ve ever been in the Puget Sound area, you know that transportation and traffic are big issues for us. Obviously, trying to defer some of that traffic and congestion by getting people into public transportation is a key part of our strategy.
But if we are taking away the certainty and predictability of tax deductions on public trasnsit – we are just going to make our transportation problems worse. On New Year’s Day, the tax benefit for those employees who take public transit will be nearly cut in half – from $245 to $130 per month. We need to extend this benefit as a matter of tax fairness.
Transportation is the second-largest expense in American households. American families should be able to choose whether to drive or take public transit – and they shouldn’t be punished because they are taking a bus, or ferry or train.
Across Washington state, we’ve seen first-hand how the other tax extenders help create an environment of certainty and predictability for jobs and job creation. These are bipartisan principles that we can all get behind.
Of particular importance to me – as I said – is the state and local sales tax deduction, which affects many people in our state. Individuals living in other states without a state income tax do not face these same challenges. But Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, and Wyoming are all in the same boat.
I’m sure that these citizens would want to have the sales tax deduction certainty and predictability. As a result of that, an average of $604 in tax deduction is real money back into people’s pockets when they itemize those various tax benefits. So we hope that this won’t continue to be uncertain in Washington state. We need these tax extenders now.
There are other provisions like the:
- New Markets Tax Credit - a great program for encouraging investment into challenging areas of our country.
- The Biodiesel Tax Credit
- The Veterans Work Opportunity Tax Credit – a tax credit to employers to encourage them to hire veterans; we have had many of these events around Washington state talking to employers who have successfully used this tax credit.
- The Low-Income Housing Tax Credit – I know the President of the Senate probably has projects all over his state that have benefitted from the Low-Income Housing Tax Credit, a great incentive to get more affordable housing built in hard-to-serve areas and challenging areas because of high-cost.
- And, as I mentioned, the Commuter Tax Benefit – all of which are tied to job creation.
So instead of giving predictability and certainty on tax credits, Congress is not getting our job done. And we should get our job done as soon as possible. It’s time for Congress to extend these important provisions and for people to make plans accordingly. I hope that the IRS can be given the predictability and certainty too in the New Year about these provisions so that we are not delaying the tax season at the end of next year.
The time to act is now. I hope my colleagues will help us get these measures which usually are renewed in a bipartisan fashion done so as soon as possible.
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