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Text of To amend the Internal Revenue Code of 1986 to allow a taxpayer to elect to deduct either State and local ...

...State and local income taxes or State and local sales taxes.

This bill was introduced on April 14, 1994, in a previous session of Congress, but was not enacted. The text of the bill below is as of Apr 14, 1994 (Introduced).

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HR 4233 IH

103d CONGRESS

2d Session

H. R. 4233

To amend the Internal Revenue Code of 1986 to allow a taxpayer to elect to deduct either State and local income taxes or State and local sales taxes.

IN THE HOUSE OF REPRESENTATIVES

April 14, 1994

Mr. SUNDQUIST introduced the following bill; which was referred to the Committee on Ways and Means


A BILL

To amend the Internal Revenue Code of 1986 to allow a taxpayer to elect to deduct either State and local income taxes or State and local sales taxes.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. ELECTION TO DEDUCT STATE AND LOCAL INCOME TAX OR STATE AND LOCAL SALES TAX.

    (a) IN GENERAL- Section 164(a) of the Internal Revenue Code of 1986 (relating to deduction for taxes) is amended by adding after paragraph (5) the following new paragraph:

      ‘(6) At the election of the taxpayer, either--

        ‘(A) State and local income taxes, or

        ‘(B) State and local general sales taxes.’.

    (b) GENERAL SALES TAXES- Section 164(b) of such Code (relating to definitions and special rules) is amended by adding at the end the following new paragraph:

      ‘(5) GENERAL SALES TAXES-

        ‘(A) IN GENERAL- The term ‘general sales tax’ means a tax imposed at one rate in respect of the sale at retail of a broad range of classes of items.

        ‘(B) SPECIAL RULES FOR FOOD, ETC- In the case of items of food, clothing, medical supplies, and motor vehicles--

          ‘(i) the fact that the tax does not apply in respect of some or all of such items shall not be taken into account in determining whether the tax applies in respect of a broad range of classes of items, and

          ‘(ii) the fact that the rate of tax applicable in respect of some or all of such items is lower than the general rate of tax shall not be taken into account in determining whether the tax is imposed at one rate.

        ‘(C) ITEMS TAXED AT DIFFERENT RATES- Except in the case of a lower rate of tax applicable in respect of an item described in subparagraph (B), no deduction shall be allowed under this section for any general sales tax imposed in respect of an item at a rate other than the general rate of tax.

        ‘(D) COMPENSATING USE TAXES- A compensating use tax in respect of an item shall be treated as a general sales tax. For purposes of the proceeding sentence, the term ‘compensating use tax’ means, in respect of any item, a tax which--

          ‘(i) is imposed on the use, storage, or consumption of such item, and

          ‘(ii) is complementary to a general sales tax, but only if a deduction is allowable under subsection (a)(6) in respect of items sold at retail in the taxing jurisdiction which are similar to such item.

        ‘(E) SPECIAL RULE FOR MOTOR VEHICLES- In the case of motor vehicles, if the rate of tax exceeds the general rate, such excess shall be disregarded and the general rate shall be treated as the rate of tax.

        ‘(F) SEPARATELY STATED GENERAL SALES TAXES- If the amount of any general sales tax is separately stated, then, to the extent that the amount so stated is paid by the consumer (otherwise than in connection with the consumer’s trade or business) to his seller, such amount shall be treated as a tax imposed on, and paid by, such consumer.’.

    (c) CONFORMING AMENDMENT- Paragraph (3) of section 164(a) of such Code is amended by striking out ‘State and local, and foreign,’ and inserting in lieu thereof ‘Foreign’.

    (d) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 1992.