Trump’s tax-reform plan could ding Nevada residents

Sep 22, 2017
In The News

WASHINGTON — President Donald Trump’s tax reform proposal calls for tax cuts across the board, but would also eliminate a deduction that could ding Silver State pocketbooks.

The proposal would eliminate the state, local and sales tax deductions on federal tax forms.

Taxpayers in Nevada, which does not have a state income tax, are allowed to deduct sales taxes when filing to the Internal Revenue Service.

That amounted to $443 million in deductions in Nevada in 2014, according to the IRS.

Individually, it would mean a loss of $1,197 in annual deductions for the average Clark County taxpayer who itemizes on federal tax forms, according to the Tax Foundation, an independent nonprofit policy group.

“It is important that any federal tax reform keeps in place the ability to deduct state sales tax,” said Rep. Dina Titus, D-Nev.

In 2014, the deduction benefitted about 260,000 Nevada taxpayers “and helped level the playing field with residents of other states with deductible income taxes,” Titus said.

Also opposed to eliminating state, local and sales tax deductions are the National Governors Association, whose vice chairman is Nevada Gov. Brian Sandoval, the National Association of Counties, the National League of Cities, the U.S. Conference of Mayors, the National Conference of State Legislatures and the Council of State Governments.

Those groups issued a joint statement in opposition, saying eliminating the state, local and sales tax deductions would represent double taxation, as these taxes are mandatory payments for all taxpayers.

“We fundamentally believe that American’s income, property and purchases should not be taxed twice,” the statement said.

Treasury Secretary Steve Mnuchin said the Trump tax plan, a wish list that will be sent to the tax-writing House Ways and Means Committee, preserves charitable deductions and doubles the standard deduction for a couple filing jointly to $24,000.

It also keeps intact the deduction for mortgage interest, one of the largest tax breaks homeowners receive when filing federal income tax returns.

Those popular items would be kept and offset by the loss of state, local and sales tax deductions.

Nevada is one of nine states that do not tax income on individuals, and one of six which does not tax income on corporations, according to the U.S. Census Bureau. Nevada generates revenue mainly through property and sales taxes.

Contact Gary Martin at 202-662-7390 or Follow @garymartindc on Twitter.

Annual local tax deduction in populous Nevada counties per filing:

Clark County, $1,197

Douglas County, $2,825

Lincoln County, $773

Nye County, $646

Washoe County, $1,860