Passage of legislation that could save about 600,000 Tennesseans an estimated $472 million on their federal income taxes may not be a cakewalk, a spokesman for Senate Majority Leader Bill Frist says. Nick Smith said the proposal to allow residents here and in seven other states to deduct sales taxes on their federal returns faces tough negotiations in Congress.
The House passed the provision earlier this month as part of a $155 billion bill seeking to resolve an international trade dispute and provide new corporate tax cuts. The House bill also includes a $10 billion buyout for the nation's tobacco farmers. The plan would do away with the 65-year-old federal price-support program for tobacco. The Senate version of the bill doesn't have the deduction provision, so a conference committee of both chambers of Congress would have to agree to include it. The start of conference committee work has been delayed by Senate Democrats seeking more influence over the process.
"Senator Frist is a co-sponsor of sales-tax deductibility legislation, and now that the House has acted, he is hopeful that Democrats will support our efforts to go to conference," Smith said.
Frist and Sen. Lamar Alexander said they would lobby Senate colleagues to accept the deductibility provision. "This is a matter of simple fairness since citizens in other states are allowed to deduct their state income tax payments," Alexander said.
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