Just when I hit the busy time of year, Congress goes out and passes a second big federal tax bill for this fall season. This bill was spawned by the tawdriest features of our foreign trade policy, and it lives up to its ugly ancestry.
The new law, which W is prepared to sign, makes an effort (albeit a half-hearted one) to remedy the most blatant violations of the World Trade Organization rules that are present in our tax laws. Members of the WTO aren't supposed to use their tax laws to subsidize exports, but the United States has done that for decades -- including in the old days, when our tax laws broke our promises under the old GATT treaty regime.
We're now under heavy WTO sanctions for our misdeeds, and so it recently became clear that there was going to be a corporate tax law revision soon. There had to be one. And when the Gucci Gulch lobbyists see that tax legislation is inevitable and imminent, they spring into action, proposing one pet tax perk after another. If there's a congressional election just weeks away, the lobby groups get an even stronger hand than the one they normally play.
Sometimes Congress is smart enough not to load the tax bill up with pork. But definitely not this time.
The latest law runs hundreds of pages, and there's something in there for every powerful member of Congress. The New York Times scratched the surface this morning with this analysis, but it will take months before the full impact of the changes is known. Some of them affect only one or two favored taxpayers; others affect broad segments of the population.
Good news for Vancouverites and all other Washington state residents: Your state sales tax just became deductible on your federal tax return if you itemize your deductions. For someone in the 25 percent federal tax bracket, that means that for every 7 cents you pay in Washington sales tax, you'll get 1.75 cents back in federal taxes. Cool for you.
But before you Oregon sales tax advocates (including my state senator, Avel Gordly) jump up and say "Us too!" -- the new federal deduction is allowed only if the state has a sales tax but no income tax.