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  • From: "Toni Hawryluk" <tonihawr AT msn.com>
  • To: <homestead AT lists.ibiblio.org>
  • Subject: Re: [Homestead] Now Outspoken, Cronkite Rips Bush's Record
  • Date: Sun, 21 Nov 2004 08:27:59 -0800

----- Original Message ----- From: Gene GeRue<mailto:genegerue AT ruralize.com>

> >Oh well, I suppose we all have weeknesses.
> >
> Suppose? Are you really uncertain about that? Maturity may well begin when
> one recognizes one's own flaws.

And how long after *that* does it take to be able
to join in the laughter while one's "foot is in one's own
mouth" (or both feet sometimes in my case) ... sigh ...
>From tonihawr AT msn.com Sun Nov 21 12:40:04 2004
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Subject: [Homestead] the IRS and a state income tax
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If your *state* does not have an income tax,

you won't be 'better off' for much longer :



excerpt:

"...minimum deduction of several hundred dollars to bring them to tax parity
with residents of states with an income tax, as will itemizers in six other
states that have a state sales tax but no income tax."



Just as sure as one hand gives, the other

is going to collect big-time 'sooner than

you think' ...



http://www.msnbc.msn.com/id/6538253/<http://www.msnbc.msn.com/id/6538253/>



Few people aware of new state sales tax deduction

By KRISTEN MILLARES BOLT

The Seattle Post Intelligencer

USA - When Brandon Dow was lugging his newly bought couch back from Portland
in the middle of last January's bitter ice storm, he thought he was crazy to
have crossed state lines just to avoid Washington's sales tax.Dow could not
have known that President Bush would sign the American Jobs Creation Act 10
months later, passing with it a provision that makes Washington's state sales
tax deductible from federal income taxes this year and next.

Some state officials are hoping that the state sales tax deduction will keep
thousands of Washingtonians from skipping across the borders to plunk down
their money, so that big-ticket consumers like Dow can count, and spend,
their savings in the state.

Unfortunately for large spenders and the business owners who love them, the
state sales tax deduction became law without much hoopla. Retailers and
analysts are saying it won't leave a ripple in holiday sales, and even
supporters of the bill say that people "won't really get it" until they see
it in their tax refunds.

The Internal Revenue Service hasn't even published the rules for the new
deduction yet. But here's what to expect:

 Residents of Washington will be allowed a minimum deduction of several
hundred dollars to bring them to tax parity with residents of states with an
income tax, as will itemizers in six other states that have a state sales tax
but no income tax.

 In addition, taxpayers will be allowed to deduct the sales tax paid for
major purchases such as for cars and boats.

 Or, for the truly calculating, the federal tax rules will allow a
taxpayer who has collected receipts to add up all of the sales taxes paid as
a deduction. Not having known at the beginning of the year that this
deduction was coming, most taxpayers are unlikely to be able to take
advantage of this potentially even larger tax break.
The Internal Revenue Service is going to publish tables that establish dollar
figures for the state sales tax owed to filers of various income levels, so
that taxpayers do not have to save all of their receipts.
This chart, called Publication 600, will also include a list of major
purchases that can be deducted in addition to the standard figure set by the
charts. Cars and boats are currently included as major purchases that count.
In the meantime, advisers say to save receipts of costly purchases, such as
for home remodeling, electronics or jewelry, which may be added to the list.
So what does this all mean for Washington and its residents?
Chang Mook Sohn of the Washington State Office of the Forecast Council said
that it's a positive move for the state.
"We are expecting about $420 million statewide, once the 2004 tax returns are
filed," said Sohn. "That's $420 million more than this year that will be
headed directly to expendable income."
Residents who already itemize their deductions should expect between $300 and
$500 more per year in tax refunds, said Mike Gowrylow, spokesman for the
Department of Revenue. He said that nearly a million taxpayers will itemize
come April. That's 37 percent of all the taxpayers in Washington.
"Most of the benefit is going to people in the middle- to upper-income
brackets between $50,000 and $100,000," said Gowrylow. "The question is if
this money will be saved or spent, and how much will trickle up into the
economy."
For Chris Titus, 29, and his brother Steven Titus, 38, it was never really a
question.
"The sales tax was always a 'so what?' for me," said the elder Titus. "It
won't impact my spending."
His younger brother agrees. "Maybe some people will go out and spend it, but
that isn't part of my long-term plans.
"I am thinking about 30 years down the road, unlike a lot of my friends, who
are only thinking about next Friday night," he added drolly.
That's just fine with lawmakers like Rep. Brian Baird, a southwestern
Washington Democrat who has urged the deduction for years.
"It's not like we are expecting someone to say, 'Oh look, honey, let's go buy
a computer now that we can deduct state sales tax,' " said Baird.
"What has chafed everybody is that Washington wasn't able to deduct while
other states were," said Baird. "The issue has always been equity, being on
the same playing field."
Taxpayers in Florida, Nevada, South Dakota, Tennessee, Texas and Wyoming will
also reap the benefits this spring. While the other 43 states have an income
tax that can be deducted on their taxpayers' federal returns, these six
states and Washington pay for state government and services with only their
state sales tax.
Congress eliminated a tax exemption for these seven states in a 1986 tax
bill, but 18 years of maneuvering in the House and the Senate brought the
right to this deduction back.
Trying to find out what it means for Washington businesses is another matter.
Most of the people contacted by the Seattle Post-Intelligencer for this
article did not know about the deduction. Even many of the businesses most
likely to benefit, such as auto and boat dealers, were also unaware of it and
so had not been using it to leverage big-ticket sales for the holiday season.
This tax break, though, isn't for everyone.
Many people will take the standard deduction because their purchases won't
add up. Others whose gross adjusted income is more than $142,700 will only be
able to deduct a percentage of their sales tax.
"The major portion of consumption is done by the middle- to
upper-middle-income residents anyway," said Sohn. "The lower income by
definition spends most of their income on food and shelter and not much on
taxable activities."
Regardless, the clock is ticking for retailers to target consumers while the
deduction lasts, which may be shorter than the current two-year expiration
date given the current aims of President Bush to reform the tax code.
Thomas Shulstad of Edmonds recently purchased a yacht that cost him $67,000
in sales tax alone, but he hadn't heard of the deduction. "I don't think many
people know about it," said Shulstad.
When asked if he would consider making further large purchases while the
deduction lasted, Shulstad replied, "Now you're making me think about it
more."
For a copy of the IRS charts and tables, due in January, call 1-800-TAX-FORM.


--------------------------------------------------------------------------------


P-I reporter Kristen Millares Bolt can be reached at 206-448-8142 or
kristenbolt AT seattlepi.com






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