Washington, D.C. - For the last three years, Congressman Kevin Brady (R-The Woodlands) has been leading the charge to restore sales tax deductibility to the federal income tax code.  Today, Brady won a major victory when the measure, included in the high-profile international tax bill (America Jobs Creation Act, H.R. 4520), passed the House of Representatives in a bi-partisan vote of 251-178. 

 

Brady, a member of the Ways and Means Committee, and deputy whip spent the last several days shoring up support for the sales tax measure and international tax bill to ensure its passage today. 

 

Taxpayers are currently permitted to deduct their state and local personal income taxes, leaving seven states, including Texas, Florida, Tennessee, Wyoming, Washington, South Dakota, Alaska, and Nevada, which rely upon sales tax, out in the cold.

 

To correct this inequity, Brady authored the Sales Tax Equity Act, H.R. 720 with 78 co-sponsors, which restores the deductibility of state and local sales tax from federal taxes that was eliminated in 1986.  His bill’s provisions were adopted into the America Jobs Creation Act.

 

“This is a huge economic boost for Texas, where taxpayers will save approximately $1 billion a year, and it’s also an issue of fairness for states like ours. The tax code shouldn’t be biased in favor of income taxes,” said Brady, a former state legislator. 

 

House Ways and Means Committee Chairman Bill Thomas stated, “Sales Tax Deductibility will be a reality for taxpayers because of Kevin Brady's leadership and determination on this issue.  For years Congressman Brady has been a champion on the issue of Sales Tax Deductibility.  In my view, he deserves the lion’s share of credit for bringing this issue to the table by pushing for a bi-partisan coalition in Congress and working this provision through Ways and Means Committee."

 

Once Brady’s measure becomes law, taxpayers could take a deduction on their federal income taxes based on a table of average deductions or provide receipts, recommended in years when cars, appliances, and other big-ticket items are purchased.   Taxpayers who live in states with state income taxes could chose either to deduct their state income tax or sales taxes from their federal tax bill. 

 

Brady credits House Majority Leader Tom DeLay with playing the pivotal role in attaching the sales tax provision to the jobs bill and applauded Chairman Thomas for his leadership and commitment to restoring tax fairness to all Americans.

 

Preliminary estimates from the Texas State Comptrollers office indicate that restoring this measure could keep $1 billion in Texas pockets and create nearly 16,000 jobs annually.  Additionally, the Comptroller projects $590 million in new investments and $874 million in increases gross state product.  Other states could be expected to benefit comparably.