As part of a tax package that Congress approved just before wrapping up on Dec. 9, four states — Alabama, Louisiana, Mississippi and Texas — will begin receiving millions of dollars in royalties from oil companies drilling off their coasts under legislation which also opens up 8 million more acres for new off-shore drilling. The legislation would also allow seven states without income taxes, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming to continue to deduct sales taxes from their federal taxable income. The sales-tax deduction is intended to assure equal treatment with citizens in 41 states who can deduct state and local income taxes when they compute their federal tax liability. The tax break for the seven states expired Dec. 31, 2005, but the extension would be retroactive to cover 2006. The provision expires at the end of 2007, but some budget experts speculate that, like other tax cuts, this one would be routinely extended. Nine states impose no income taxes, but Alaska and New Hampshire also have no state sales taxes so are unaffected. Read More

Russell Heimlich  is a former web developer at Pew Research Center.