TAX NEWS - 2010

US Tax: Congress hits us again, denies sales tax deduction

We're being punished for lack of income tax

U.S. Congress is doing it to Tennessee taxpayers again, punishing us for not having a state income tax.

A state's tax structure should be of no concern to Washington as long as it is legal and equitable. Yet because Tennessee is one of a handful of states that decide to base state tax revenue on sales rather than on personal income, Congress slaps us with a penalty.

It happens every few years, depending on whims of the national economy and politics: Congress decides not to continue to allow our taxpayers to deduct from federal income taxes what we pay in state sales taxes.

That's reasonable for most states, because most have state income taxes. Taxpayers are allowed to deduct what they pay in state income taxes. Many of those states also have a sales tax, but in those states the sales tax is relatively minor.

But we states that have no income tax are caught in a bind. Our citizens are denied the ability to deduct their major state tax cost as  those in other states can.

This time around, the U.S. Senate acted in the name of holding down the federal deficit. But to do so, it denied us equal treatment, and that's not right.