While there is little surprising in a group of politicians digging around for more vote-buying money, a justification for this one almost caused me to spit hot chocolate all over my desk. From the liberal Economic Opportunity Institute:
By not having a state income tax, Washington loses its opportunity to take advantage of shifting part of the state’s tax burden to the federal government. Taxpayers that itemize deductions on their federal tax returns are allowed to deduct state and local income taxes from their federal taxable income[3]. For example, if a Washington family in the 27% federal tax bracket pays $1,000 in state income taxes they can deduct this amount from their federal taxable income for a savings of $270. By virtue of the deduction, the federal government has paid part of the family’s state tax bill.
Did you catch that? They want to create a new $1000 tax so some families -- less than one-third of taxpayers itemize deductions on federal returns -- can reduce their federal taxes by $270.
Washington is one of seven states without a state income tax. I can't imagine any of the others falling for such flimsy reasoning.
