Sales-tax deduction saved in budget deal

There is plenty of good to go with the bad in the federal budget and tax deals that the U.S. House and Senate passed on bipartisan votes late last week.

The bigger bill is a massive $1.1 trillion spending package for fiscal year 2016, which ends in October. Another extends more than $600 billion of tax breaks over multiple years.

Overall, the agreements won by political compromise contain more good than bad, though some elements — such as a lifting of an oil-export ban that could result in more volatile oil passing through Washington on rail tankers — are worrisome. The measures also punt on serious reforms to the tax code.

But the alternative was to reject the compromises and have another fruitless dance with chaos at the U.S. capital.

The bill makes the sales-tax deduction permanent, which Sen. Maria Cantwell originally sought in a separate bill, and that’s a big win for Washington residents. This ends the yearly struggles to win this deduction for taxpayers in the roughly eight states that lack an income tax and instead rely heavily on sales taxes.

About 900,000 Washington filers claimed the deduction in past years. U.S. Rep. Denny Heck, an Olympia Democrat who voted for both measures, called the sales tax deduction a “major, major” factor in his vote and a win for tax fairness. Heck estimated the tax savings for our state’s taxpayers may reach $600 million a year.

Heck said the deal also preserves the Earned Income Tax Credit, a child tax credit and a college tax credit program; he called it a one-time opportunity to make these provisions permanent.

The budget also increases funds for the U.S. Forest Service to use on wildfire suppression, research and to reduce fire hazards. This year was the worst for wildfires in state history, burning 1 million acres of state, federal and private land.

There is about $450 million for the Land and Water Conservation Fund that buys land for recreation. Other provisions extend clean energy credits for solar and wind producers and provide incentives for biodiesel.

The budget also pays for nuclear waste cleanup at Hanford, expands federal medical research at the National Institutes of Health, and spares cuts to Planned Parenthood’s family planning, women’s health and contraceptives services. It preserves the Affordable Care Act, or Obamacare, for another year; but two taxes that pay for the ACA are delayed without a replacement tax source.

Lifting a 40-year ban on oil exports comes at a time oil imports remain a large share of the domestic oil supply. If oil is exported, this is worrisome because the oil industry’s is seeking approval for as many as seven sites in Washington and Oregon, relying on oil shipped by rail.

Heck opposed the oil-export provision but saw little alternative — short of shutting down government — if he voted against the packages. Similarly he objected to tax breaks that lacked replacement funds.

But he voted for both bills “because I believe the alternative is to shut down the federal government and return to sequestration budgets, which will hurt our region.”

That’s true.

This story was originally published December 19, 2015 at 4:01 PM with the headline "Sales-tax deduction saved in budget deal."