WASHINGTON — Sen. Dean Heller, R-Nev., has introduced a bill that would make the deduction for state and local sales taxes permanent, while Rep. Bob Goodlatte, R-Va., has introduced a bill that would make the moratorium on taxing Internet access permanent.
The bills both have bipartisan support and were introduced last week, the first week of the 114th Congress.
The state and local sales tax deduction is taken in lieu of the state and local income tax deduction. It is particularly important in the states that do not have income taxes and finance government services using sales-tax revenue.
States that do not tax income from wages include Nevada, Washington, Wyoming, South Dakota, Tennessee, Florida and Texas. Not surprisingly, a bipartisan group of senators from these states cosponsored Heller's bill, S. 126. The cosponsors include Sen. Maria Cantwell, D-Wash., and Senate Minority Leader Harry Reid, D-Nev.
Currently, the deduction for state and local sales taxes is one of the temporary tax provisions known as a "tax extender." The deduction was last renewed in December for all of 2014. Congress will have to renew it again or make it permanent in order for people to take the deduction on the taxes they file next year.
"Taxpayers shouldn't have to guess every year whether they will be able to claim this deduction," Cantwell said in a news release. "This is a matter of tax fairness for 11 million taxpayers nationwide - and it's time for Congress to act."
"The Silver State's families have seen their fair share of difficult times over the years. This bill allows them to keep their hard-earned money in their own pockets and in turn, boost local economies," Heller said, referring to Nevada.
Bills to make the state and local sales tax permanent were introduced in both the House and the Senate during the last Congress, but they were not approved. Last fall, congressional leaders were working on a deal to make the deduction and several other extenders permanent, but President Obama threatened to veto the potential agreement.
Goodlatte's bill - the Permanent Internet Tax Freedom Act, or H.R. 235 -- would make permanent the part of the Internet Tax Freedom Act that bans state and local governments from taxing internet access. The ITFA was originally enacted in 1998, and the moratorium has since been extended five times, according to a press release from Goodlatte's office. The most recent extension was part of the spending bill Congress passed in December and goes through the end of the federal government's 2015 fiscal year.
A bill similar to H.R. 235 passed the House during the last Congress but did not make it out of the Senate. Goodlatte's bill is cosponsored by Reps. Anna Eshoo, D-Calif., Tom Marino, R-Pa., Steve Chabot, R-Ohio, and Steve Cohen, D-Tenn.
"Whether business owners or jobseekers, grandparents or students, all Americans benefit from tax-free access to the Internet. Internet access drives innovation and the success of our economy. It is a gateway to knowledge, opportunity, and the rest of the globe," Goodlatte, the House Judiciary Committee chairman, said. "And year after year, Congress has chosen to temporarily extend the bipartisan ban on Internet access taxes. The time has come to make this ban permanent."
State and local government groups, including the National Association of Governors, have said that they want an extension of the moratorium on taxing internet access to move with legislation that allows states to require remote sellers such as online retailers to collect sales taxes. A bill that addressed the Internet sales tax issue, called the Marketplace Fairness Act, passed the Senate during the last Congress but stalled in the House in part because Goodlatte had issues with the legislation.
