Highlights of Latest Tax Legislation

The recently-released Summary of the Chairman’s Mark for H.R. 4520: Jumpstart our Business Strength (JOBS) Act gives some idea of what the next big tax-reform bill to meander through Congress might look like.

There’s nothing too crazy in there yet — any revolutionaries hoping to see the tax code scrapped in favor of a national sales tax will have to be satisfied with a “blue ribbon” group that the bill impanels to gravely consider such radical measures. But there are a couple of items that may be of interest to Picket Line readers:

Currently, when figuring out your federal income tax bill, you can deduct from your income any local and state income tax that you’ve paid. However, ever since a tax “simplification” measure was passed, you aren’t allowed to deduct any local or state sales taxes. That seems to be unfair to residents of states with high sales taxes, or with only a sales tax and no income tax (last I checked, there were nine such states), especially when compared to residents of those few states that have income taxes but no sales tax at all.

Back before , you could deduct all of the state and local taxes you paid. You figured out your sales tax deduction either by carefully keeping track throughout the year, or (more likely) looking up an estimate in an IRS-maintained table of how much the average taxpayer with an adjusted gross income like yours paid.

The current bill’s text would restore the sales tax deduction, though I can’t tell from my casual reading of it whether it adds this to the state & local income tax deduction, or if you have to choose one or the other. (Some earlier reports about this legislation have said that this is what the bill will do.) The bill mentions the IRS-maintained tables, but not the option of deducting your actual payments.

This might be good news to some people using the income-lowering method of tax resistance, as their state sales tax payments might very well exceed their income tax payments (or they may live in a state without a state income tax) and this will give them an additional federal deduction.

Don’t you wish you could get away with putting “and furthermore, you can’t ever sue me, neener neener” at the end of everything you write?

Anyway, this is that proposal to let the IRS hire bounty hunters to go after debts it’s having a hard time collecting on its own. Won’t that be fun.