III 

109TH CONGRESS 

1ST SESSION S. RES. 294 

Expressing the sense of the Senate on the retention of the Federal tax 

deduction for State and local taxes paid. 

IN THE SENATE OF THE UNITED STATES 

NOVEMBER 2, 2005 

Mr. SCHUMER (for himself, Mr. LAUTENBERG, Mr. DURBIN, Mrs. CLINTON, 

Mr. CORZINE, Mr. SALAZAR, Mr. KENNEDY, Mr. LIEBERMAN, Mrs. 

FEINSTEIN, Mr. DODD, Mr. KERRY, Mr. OBAMA, Mrs. BOXER, Mr. 

FEINGOLD, Mr. KOHL, and Ms. STABENOW) submitted the following resolution; which was referred to the Committee on Finance 

RESOLUTION 

Expressing the sense of the Senate on the retention of the 

Federal tax deduction for State and local taxes paid. 

Whereas no American should be unnecessarily or excessively 

burdened with additional taxes; 

Whereas the Federal income tax has grown more complicated 

and unmanageable over time, imposing burdensome administrative and compliance costs on American taxpayers; 

Whereas on January 7, 2005, President George W. Bush created the President’s Advisory Panel on Federal Tax Reform (the ‘‘Panel’’) via Executive Order 13369; 

Whereas the Panel was tasked with providing several options 

for Federal tax reform that would simplify Federal tax 
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laws, retain progressivity, and promote long-run economic 

growth and job creation; 

Whereas in its final report, released publicly on November 1, 

2005, the Panel recommended the complete repeal of the 

Federal deduction for State and local taxes, as a central 

component of both the ‘‘Simplified Income Tax Plan’’ 

and the ‘‘Growth and Investment Tax Plan’’; 

Whereas State and local taxes have been deductible from the 

Federal income tax since the inception of the Federal income tax in 1913; 

Whereas eliminating the deduction for State and local taxes 

would create a new form of double taxation at a time 

where efforts are being made to reduce other forms of 

double taxation, since repeal would require millions of 

taxpayers to pay Federal taxes on income that is also 

taxed at the State or local level; 

Whereas Congress has recently taken steps to expand, rather 

than cut back, the State and local tax deduction, by reinstating a deduction for State sales taxes for some taxpayers (previously repealed as part of the Tax Reform 

Act of 1986), as part of the American Jobs Creation Act 

of 2004; 

Whereas there is some concern, as noted by the nonpartisan 

Urban-Brookings Tax Policy Center, that eliminating the 

deduction could ‘‘lower support for public services and 

lead to a ‘race to the bottom’ in terms of State and local 

expenditures as States compete to have the lowest taxes 

in order to attract higher-income households’’; 

Whereas the deduction for State and local taxes is not just 

a concern for a small minority of taxpayers in the largest 

States, as 22 States saw more than one-third of their 
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•SRES 294 IS

taxpayers take the deduction in 2003, the latest year for 

which data is available (Maryland, New Jersey, Connecticut, Colorado, Oregon, Minnesota, Massachusetts, 

Virginia, Utah, California, Georgia, New York, Wisconsin, Arizona, Rhode Island, Michigan, Delaware, 

North Carolina, Illinois, New Hampshire, Nevada, and 

Idaho (ranked in order of the percentage of taxpayers affected)); 

Whereas in tax year 2003, 43,538,000 taxpayers in the 

United States took advantage of the Federal deduction 

for State and local taxes, deducting a total of 

$315,690,000,000, thereby saving taxpayers in the 

United States approximately $88,390,000,000 in Federal 

income taxes, assuming an average marginal rate of 28 

percent for taxpayers who itemize; and 

Whereas in tax year 2003, the top 25 States ranked by the 

number of taxpayers affected represented 77 percent of 

the taxpayers affected nationally, and took 85 percent of 

the total deductions for State and local taxes, as detailed 

below: 

(1) In California, 5,807,000 taxpayers deducted a 

total of $54,920,000,000, thereby saving California taxpayers approximately $15,380,000,000 in Federal income 

taxes. 

(2) In New York, 3,228,000 taxpayers deducted a 

total of $37,600,000,000, thereby saving New York taxpayers approximately $10,530,000,000 in Federal income 

taxes. 

(3) In Illinois, 1,994,000 taxpayers deducted a total 

of $13,720,000,000, thereby saving Illinois taxpayers approximately $3,840,000,000 in Federal income taxes. 
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(4) In Ohio, 1,809,000 taxpayers deducted a total of 

$12,720,000,000, thereby saving Ohio taxpayers approximately $3,560,000,000 in Federal income taxes. 

(5) In New Jersey, 1,791,000 taxpayers deducted a 

total of $18,750,000,000, thereby saving New Jersey taxpayers approximately $5,250,000,000 in Federal income 

taxes. 

(6) In Pennsylvania, 1,765,000 taxpayers deducted 

a total of $12,400,000,000, thereby saving Pennsylvania 

taxpayers approximately $3,470,000,000 in Federal income taxes. 

(7) In Michigan, 1,627,000 taxpayers deducted a 

total of $10,350,000,000, thereby saving Michigan taxpayers approximately $2,900,000,000 in Federal income 

taxes. 

(8) In Georgia, 1,416,000 taxpayers deducted a total 

of $8,720,000,000, thereby saving Georgia taxpayers approximately $2,440,000,000 in Federal income taxes. 

(9) In Virginia, 1,355,000 taxpayers deducted a 

total of $9,630,000,000, thereby saving Virginia taxpayers approximately $2,700,000,000 in Federal income 

taxes. 

(10) In North Carolina, 1,304,000 taxpayers deducted a total of $8,720,000,000, thereby saving North 

Carolina taxpayers approximately $2,440,000,000 in 

Federal income taxes. 

(11) In Maryland, 1,260,000 taxpayers deducted a 

total of $10,410,000,000, thereby saving Maryland taxpayers approximately $2,920,000,000 in Federal income 

taxes. 

(12) In Massachusetts, 1,216,000 taxpayers deducted a total of $10,840,000,000, thereby saving Massa-
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chusetts taxpayers approximately $3,040,000,000 in Federal income taxes. 

(13) In Minnesota, 969,000 taxpayers deducted a 

total of $7,060,000,000, thereby saving Minnesota taxpayers approximately $1,980,000,000 in Federal income 

taxes. 

(14) In Wisconsin, 961,000 taxpayers deducted a 

total of $8,000,000,000, thereby saving Wisconsin taxpayers approximately $2,240,000,000 in Federal income 

taxes. 

(15) In Colorado, 856,000 taxpayers deducted a 

total of $4,570,000,000, thereby saving Colorado taxpayers approximately $1,280,000,000 in Federal income 

taxes. 

(16) In Arizona, 841,000 taxpayers deducted a total 

of $4,110,000,000, thereby saving Arizona taxpayers approximately $1,150,000,000 in Federal income taxes. 

(17) In Indiana, 832,000 taxpayers deducted a total 

of $4,530,000,000, thereby saving Indiana taxpayers approximately $1,270,000,000 in Federal income taxes. 

(18) In Missouri, 772,000 taxpayers deducted a 

total of $4,890,000,000, thereby saving Missouri taxpayers approximately $1,370,000,000 in Federal income 

taxes. 

(19) In Connecticut, 713,000 taxpayers deducted a 

total of $7,970,000,000, thereby saving Connecticut taxpayers approximately $2,230,000,000 in Federal income 

taxes. 

(20) In Oregon, 641,000 taxpayers deducted a total 

of $5,100,000,000, thereby saving Oregon taxpayers approximately $1,430,000,000 in Federal income taxes. 

(21) In South Carolina, 574,000 taxpayers deducted 

a total of $3,390,000,000, thereby saving South Carolina 
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taxpayers approximately $949,000,000 in Federal income 

taxes. 

(22) In Alabama, 538,000 taxpayers deducted a 

total of $2,090,000,000, thereby saving Alabama taxpayers approximately $586,000,000 in Federal income 

taxes. 

(23) In Kentucky, 515,000 taxpayers deducted a 

total of $3,300,000,000, thereby saving Kentucky taxpayers approximately $925,000,000 in Federal income 

taxes. 

(24) In Oklahoma, 434,000 taxpayers deducted a 

total of $2,320,000,000, thereby saving Oklahoma taxpayers approximately $650,000,000 in Federal income 

taxes. 

(25) In Iowa, 397,000 taxpayers deducted a total of 

$2,510,000,000, thereby saving Iowa taxpayers approximately $702,000,000 in Federal income taxes: Now, 

therefore, be it 

1 Resolved, That it is the sense of the Senate that Con2 gress should not repeal or substantially alter the long3 standing Federal tax deduction for State and local taxes. 

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