MTW wrote:
- quote -

The exception is when the some competitors are not subject
to the same tax . For example Airbus would not have to pay
the WA gross receipts tax but Boeing does. Guess they have
to lay off some WA employee. The most interesting thing I
ever saw was how much corporate income is reported in
Switzerland in comparison to the rest of Europe. I just hope
Canada never figures this out.

--
Frederick E. Jorden http://Tax-Accounting-Payroll.com
7825 Midlothian Tpk - 207 Richmond, VA 23235-5247
EMAIL knowtax[at]bigfoot.com
(804) 320-6210 FAX (804) 320-6211

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Harlan Lunsford wrote:
- quote -

Signed.

--
Alan
http://taxtopics.net

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Frederick Jorden wrote:

- quote -

Absolutely! The business gross receipts tax in WA is really
a "hidden" sales tax.

Or, as my dear departed uncle used to say, "BUSINESSES don't
pay taxes; PEOPLE pay taxes," referring to the fact that ALL
taxes are eventually passed along in the form of higher
prices for goods and services.

MTW

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Frederick Jorden wrote:
- quote -

The pass on is in higher prices to the consumer. If all the
businesses are in the same market and are subject to the
same locally higher taxes their prices will tend to recoup
the added expense.

--
Frederick E. Jorden http://Tax-Accounting-Payroll.com
7825 Midlothian Tpk - 207 Richmond, VA 23235-5247
EMAIL knowtax[at]bigfoot.com
(804) 320-6210 FAX (804) 320-6211

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MTW wrote:
- quote -

And frequently high business taxes can be passed on to
consumers via higher taxes. So even if a state does not have
an individual income tax you pay for it in the end.

--
Frederick E. Jorden http://Tax-Accounting-Payroll.com
7825 Midlothian Tpk - 207 Richmond, VA 23235-5247
EMAIL knowtax[at]bigfoot.com
(804) 320-6210 FAX (804) 320-6211

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Harlan Lunsford <hlunsford[at]bellsouth.net> writes:

- quote -

The glory of "historical" files. Find the old tables, dust
'em off, account for inflation, et voila!

Phil Marti
Clarksburg, MD

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Frederick Jorden wrote:

- quote -

Here is my understanding of why this was done the way it was
done: Years ago I read that Congress probably could NOT
enact a measure that says: "If you live in a state with an
income tax, you can deduct that tax; if not, you can deduct
your sales tax instead," because such provision might
"discriminate" between/among states and therefore run afoul
of constitutional provisions. Thus, they structured this as
a "choice" which is "blind" to the circumstances in any
particular state. The point is, they did NOT intend to
simply revive the sales tax deduction for EVERYONE (as the
law was 20 years ago).

As to "fairness," if I were King I would abolish the tax
deduction entirely. <g> But, in the absence of that, I think
the new law (allowing a deduction for sales tax as a choice)
is relatively more fair than the recent situation that has
definitely "screwed" the people in the 7 or so no-income-tax
states.

- quote -

No one around here (that I know, at least) brags about the
lack of an income tax. In fact, in certain political circles
the enactment of same is strongly advocated. No one likes
our relatively high sales tax, which applies broadly to many
"services" that aren't taxed in other states. And, most
definitely, everyone (in business) HATES our business gross
receipts tax. When you stack it all up, Washington state
always seems to place in the top half (if not the top third)
of HIGH TAX STATES. So, it only seems fair to me that if
people in other states are allowed to deduct their income
tax, some accommodation needs to be made for states like
Washington.

MTW

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MTW wrote:
- quote -

But what about the states that have both an income and sales
tax. The new provision is very unfair to them. But I will
not stoop to call folks who are willing to pay three or four
bucks for a cup of coffee; a loser. When you start seeing
how much your sales tax totals maybe we will not have to
listen to bragging about how you do not pay income tax.

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- quote -

The bill even benefits some people in the relatively high
income tax state of New York! NY doesn't tax any federal,
state or local government (or school district) retirement
income, excludes the first $20K of any other retirement
income, and of course doesn't tax federal interest or social
security. That combined with a $14,600 MFJ standard
deduction means that many seniors don't pay any state income
tax. But with an 8-1/4% sales tax, and maybe a new car,
there's money to be saved.

--
Don EA in Upstate NY

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"JanZtax" <janztax[at]aol.com> wrote:

- quote -

Here is the answer from a recent editorial:

"Ordinarily, a tax bill benefiting only eight of the 50
states wouldn't have much chance of success. That's where
the power of politics takes over. Among the affected states
are Texas (home of the president and the House majority
leader), Tennessee (home of the Senate majority leader),
South Dakota (home of the Senate minority leader), Wyoming
(home of the vice president) and Florida (governed by the
president's brother, represented by two Democratic senators
and home of 27 crucial electoral votes)."

http://www.lakelandledger.com/apps/p...44/1036/EDIT03

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JanZtax wrote:

- quote -

At first I thought that a queer question, but after re
reading it twice; then again, it began to make some sense.

And I think the answer is the "state taxes" you speak of
just refer to income tax, same as now.

Of course a lot of work has to be done between now and tax
form time by IRS. Somebody's got to come up with all those
tables since, once the bill is signed, it appears to apply
to this year.

One point though. In trying to decide which is more
advantageous, one must also allow for any possible refund of
income tax next year that will be taxable.

Oh, and didn't the old tables also allow for adding big
ticket items? I think this does, too. And didn't the old
tables apply just to state sales tax? And did we not
previously adjust the amount for the added local county and
city sales tax rates? (e.g. if the state amount were 4%
and result 400$, adjust it up for added 3% county tax to
700$? Ah yes, those were the good old days!

ChEAr$,
Harlan Lunsford, EA n LA

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A.G. Kalman wrote:

- quote -

Speaking of which, I hope someone will post a follow up when
the President signs the bill.

I just wrote an extra newsletter this morning and ready to
email to clients pending the signing.

ChEAr$,
Harlan Lunsford, EA n LA

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- quote -

Spoken like someone from a state with an income tax. In
1986, in the spirit of "simplification", seven states with
only a sales tax were cut off from deducting the costs of
state government. Those states with an income tax were
allowed to continue to deduct such expenses. I don't know if
the intent was to "force" the sales tax only states to adopt
an income tax, but it didn't work.

This section of the bill will primarily benefit the
residents of those seven states, although residents of
income-tax states can choose which deduction to claim
(whichever is higher). The deduction (unless extended) is
only for tax years 2004 and 2005, and requires that you be
able to itemize deductions. That alone probably eliminates a
lot of "beneficiaries", except those that make large capital
purchases during the year (houses, cars, trucks, etc).

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- quote -

The choice is between sales tax and state income tax. It is
for the benefit of taxpayers in Florida (election year) and
the other states with no income tax. The logic of giving a
deduction to taxpayers who do not get one as a result of
escaping state income tax is beyond me.

The sales tax choice could benefit residents of income tax
states who purchase yachts, luxury cars, expensive jewelry,
etc.

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anztax[at]aol.com (JanZtax) wrote:

- quote -

They didn't go back to the old 1986 rules. They created a
new rule that anyone can use. However, it was really
implemented for those individuals who live in the 9? states
without an income tax. If you itemize, you can elect to
deduct state income taxes or deduct sales & use taxes. Your
choice. Congress asked the IRS to establish tables by
geography and AGI that an individual could use. In lieu of
tables you can use your records (copies of receipts) to
establish the amount of sales tax. The tables would not
include big ticket items like cars and boats. Those amounts
can be added to the table values.

The net of this, is that individuals in the 9? states who
itemize just got another deduction. Individuals in states
with low income tax rates should look at which method
optimizes their income. In addition individuals in the
other states who bought big ticket items may also want to
look at both methods.

Alan
http://taxtopics.net

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JanZtax wrote:

- quote -

Good grief, Jan, wake up and smell the coffee - from
Starbucks in SEATTLE !!! <g
Washington state, a "no income tax state," has been
subsidizing the rest of you losers (no offense to anyone)
since 1986 (or thereabouts). It's about time that we receive
the "substantial justice" of being able to deduct our
(relatively high and all-inclusive) sales tax! <g> Now, if
we can just ~get even~ for the last 18 years...

But, I agree, the ~choice~ between deducting sales or income
taxes might produce some odd results in circumstances where
that choice exists.

MTW

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- quote -

What's the point of going back to the old sales tax
deduction? If taxpayers can choose between taking sales tax
or state taxes, which state taxes would that include --- all
withholding and estimated tax payments, prior year payments,
and payments to another state?

Jan Zobel EA

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The subject bill was approved by both houses of Congress and
now awaits the signature of the President. The text,
conference report and summary information is at:

http://waysandmeans.house.gov/Special.asp?section=1570

--
Alan
http://taxtopics.net

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