Tennessee Congressional Democrats Vote for Tax Relief: Legislation Would Extend Sales Tax Deduction

Today’s legislation addresses a number of tax and energy concerns, including the extension of dozens of tax provisions and the creation of energy-related tax incentives. Some of the bill's provisions include:

· $3 billion in tax credit bonds to State and local government to make energy conservation investments in public infrastructure and research.
· Incentives for carbon capture and sequestration demonstration projects.
· Tax credits for the purchase of fuel-efficient, plug-in hybrid vehicles.
· Closing tax loopholes for offshore companies.

Tennessee’s Congressional Democrats hailed the inclusion of a sales tax deduction extension in today’s legislation. This extension comes following years of significant effort to protect, extend and make permanent that deduction. In 2003, Congressmen Cooper, Davis, Gordon and Tanner of Tennessee introduced the “Stop Discrimination Against Seven States Act of 2003,” a bill to permanently make a sales tax deduction law. Tennessee’s Congressional Democrats later supported alternative legislation that allowed for a temporary federal sales tax deduction and became law.

The sales tax deduction has made a tremendous difference for families struggling to pay their bills. According to the House Ways and Means Committee, in 2006 alone, 574,393 Tennessee families elected to take the general state sales tax deduction on $1.2 billion in state and local taxes. This deduction expired in December of 2007, but will be extended through the end of 2008 if today’s legislation becomes law.

“I was very pleased with the passage of this important legislation. Earlier this year, I introduced H.R. 5744, which would have extended permanently the deduction of the state and local sales tax. Although this bill only extends the deduction for another year, this was vital for Tennesseans,” remarked Congressman Steve Cohen (TN-9). “This has been an issue near and dear to me since my time in the Tennessee State Senate when then Lt. Gov. Wilder regularly spoke about this inequity. My colleagues in the Tennessee delegation and I will continue to fight to make the sales tax deduction permanent.”

“I’m proud that Congress voted to extend the sales tax deduction today,” said Congressman Jim Cooper (TN-5). “It’s just a matter of fairness: after all, we’re still paying our share of state and local taxes, we’re just paying them in the form of a sales tax. I’m glad the IRS will be treating people from sales tax states the same way it treats people from income tax states.”

“The House was able to pass legislation aimed at leveling the playing field for thousands of Tennessee taxpayers by extending the sales tax deduction,” said Congressman Lincoln Davis (TN-4) “Better yet, we were able to extend this tax relief for our working families without adding to the national debt.”

“Without this deduction, Tennesseans would pay more in federal taxes than residents of equal income in states that have an income tax,” said Congressman Gordon (TN-6). “We shouldn’t be penalized by the IRS for living in a state that doesn’t tax income.”

"Thousands of Tennessee families rely on sales tax deduction to ensure they are not penalized because Tennessee has a different tax structure," said Rep. Tanner (TN-8), a member of the House Ways and Means Committee, which wrote the bill. "I am proud of our work to extend this important deduction in a fiscally responsible way that does not add to our national debt."

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Contact:
Marilyn Dillihay, Press Secretary, 202-225-3265
Charlie Gerber, Communications Assistant, 202-225-3265