Senator John ThuneI am quite certain I can make the following statement without any double-checking of my facts: “No South Dakotan enjoys completing their tax returns.” Even if we are receiving a refund, the steps necessary to get that check from the IRS make us cringe. The only group of individuals who might disagree could be the accountants who make their living off of the maze of forms and schedules that haunt us every April.
I bring up this depressing topic only because I am calling on Congress to help make next year’s tax season a little better for South Dakota taxpayers. Sitting before the House and Senate is legislation to extend the deductibility of state and local sales tax on our federal tax returns. Most states have income taxes, and taxpayers who itemize in such states can deduct the state income taxes they pay on their federal tax returns. Over the last few years South Dakota taxpayers who itemize, along with similar taxpayers from other states that do not have a state income tax, have had the ability to deduct their state sales tax in lieu of state income tax.
One study by the Congressional Research Service puts the projected savings for South Dakota taxpayers at $30 million each year. That is real money that could be used to invest in an ethanol plant, hire another employee at a small business, or put towards a child’s college tuition fund. I am sure taxpayers in the impacted states would rather be spending or investing that money themselves than funding yet another inefficient government program.
It makes no sense to essentially punish taxpayers in the handful of states that choose not to fund their state programs through a state income tax. That is why I have strongly supported both the short-term extension of the federal deductibility of state and local sales tax, as well as the permanent extension. Leaders in Congress have chosen to bundle this expiring tax provision with a number of other expiring tax provisions into a single package. Extending these expiring tax provisions has nearly unanimous support among Members of Congress, but politics has gotten in the way of making sure they are extended.
With the election over I am calling on leaders from both parties in both the House and Senate to come together and pass these expiring tax provisions, including the state sales tax deduction. Republicans are handing over power in both the Senate and the House to Democrats; passing these extensions would send a message to Americans that we can work together on the things that matter most to them. I know South Dakota taxpayers are waiting. It’s a simple question of fairness, and South Dakotans deserve nothing less.