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END DISCRIMINATORY STATE TAXES FOR 

AUTOMOBILE RENTERS ACT OF 2011 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COURTS, COMMERCIAL 

AND ADMINISTRATIVE LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

ON

H.R. 2469 

FEBRUARY 1, 2012 

Serial No. 112–100 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 

(II) 

COMMITTEE ON THE JUDICIARY 

LAMAR SMITH, Texas, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

DENNIS ROSS, Florida 

SANDY ADAMS, Florida 

BEN QUAYLE, Arizona 

MARK AMODEI, Nevada 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

MIKE QUIGLEY, Illinois 

JUDY CHU, California 

TED DEUTCH, Florida 

LINDA T. SA ́ NCHEZ, California 

JARED POLIS, Colorado 

SEAN MCLAUGHLIN, Majority Chief of Staff and General Counsel 

PERRY APELBAUM, Minority Staff Director and Chief Counsel 

SUBCOMMITTEE ON COURTS, COMMERCIAL AND ADMINISTRATIVE LAW

HOWARD COBLE, North Carolina, Chairman 

TREY GOWDY, South Carolina, Vice-Chairman 

ELTON GALLEGLY, California 

TRENT FRANKS, Arizona 

DENNIS ROSS, Florida 

BEN QUAYLE, Arizona 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

MELVIN L. WATT, North Carolina 

JARED POLIS, Colorado 

DANIEL FLORES, Chief Counsel 

JAMES PARK, Minority Counsel 

(III) 

C O N T E N T S 

FEBRUARY 1, 2012 

Page 

THE BILL 

H.R. 2469, the ‘‘End Discriminatory State Taxes for Automobile Renters Act 

of 2011’’ ................................................................................................................. 3 

OPENING STATEMENTS 

The Honorable Howard Coble, a Representative in Congress from the State 

of North Carolina, and Chairman, Subcommittee on Courts, Commercial 

and Administrative Law ...................................................................................... 1 

The Honorable Steve Cohen, a Representative in Congress from the State 

of Tennessee, and Ranking Member, Subcommittee on Courts, Commercial 

and Administrative Law ...................................................................................... 12 

WITNESSES 

Sally Greenberg, Executive Director, National Consumers League 

Oral Testimony ..................................................................................................... 14 

Prepared Statement ............................................................................................. 17 

Brian Frederick, Executive Director, National Sports Fan Coalition 

Oral Testimony ..................................................................................................... 26 

Prepared Statement ............................................................................................. 28 

Raymond A. Warren, Deputy Commissioner of Revenue and Legal Counsel, 

Arlington, VA, on behalf of the National Association of Counties, the National League of Cities, the United States Conference of Mayors, and the 

Government Finance Officers Association 

Oral Testimony ..................................................................................................... 36 

Prepared Statement ............................................................................................. 38 

Michael W. McCormick, Executive Director, Global Business Travel Association 

Oral Testimony ..................................................................................................... 43 

Prepared Statement ............................................................................................. 45 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Letter from Josh Nassar, Legislative Director, International Union, United 

Automobile, Aerospace & Agricultural Implement Workers of America 

(UAW) ................................................................................................................... 54 

Letter from Thomas M. James, President and CEO, Truck Renting and Leasing Association (TRALA) ..................................................................................... 56 

Prepared Statement of the Federation of Tax Administrators, and Government Finance Officers Association ..................................................................... 58 

Letter from Bob Barton, President, the American Car Rental Association 

(ACRA) .................................................................................................................. 61 

Prepared Statement of Matt Blunt, President of the American Automotive 

Policy Council (AAPC) ......................................................................................... 63 

Page

IV 

Prepared Statement of the Interactive Travel Services Association (ITSA), 

and the Business Travel Coalition (BTC) .......................................................... 66 

Letter from Richard D. Broome, Senior Vice President, Corporate Affairs 

& Communications, The Hertz Corporation ...................................................... 70 

Letter from Charles M. Loveless, Director of Legislation, the American Federation of State, County and Municipal Employees (AFSCME) ...................... 72 

Prepared Statement of Jeffrey Friedman, Sutherland, Asbill & Brennan LLP . 73 

(1) 

END DISCRIMINATORY STATE TAXES FOR 

AUTOMOBILE RENTERS ACT OF 2011 

WEDNESDAY, FEBRUARY 1, 2012 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COURTS, COMMERCIAL AND ADMINISTRATIVE LAW, COMMITTEE ON THE JUDICIARY, Washington, DC. 

The Subcommittee met, pursuant to call, at 1:34 p.m., in room 

2141, Rayburn Office Building, the Honorable Howard Coble 

(Chairman of the Subcommittee) presiding. 

Present: Representatives Coble, Gowdy, Quayle, Cohen, Johnson, 

Polis 

Staff present: (Majority) Daniel Flores, Subcommittee Chief 

Counsel; Travis Norton, Counsel; Johnny Mautz, Counsel; Ashley 

Lewis, Clerk; (Minority) James Park, Subcommittee Chief Counsel; 

and Norberto Salinas, Counsel. 

Mr. COBLE. The Subcommittee will come to order. Good to have 

you all with us today. 

This Congress, our Subcommittee has considered a number of 

bills addressing taxes that appear to be unfair or inefficient. While 

several iterations of H.R. 2469 have been included in past sessions 

of Congress, car rental taxes are another area of our tax law that 

have been routinely criticized on Capitol Hill. 

Ranking Member Cohen, my good friend from Tennessee, and 

our Republican colleague from Missouri, Sam Graves, have taken 

on the task of trying to address these criticisms by introducing 

H.R. 2469. Hopefully, today’s hearing will shed some light on this 

issue and on H.R. 2469. 

State and local governments impose excise taxes on car rentals 

for a number of purposes. While these taxes are explicitly applied 

to rental vehicles, they undoubtedly raise the ire of the car rental 

industry, and travelers who rely on car rentals. 

During the past several years, our office has received critical 

comments about car rental taxes from the car rental industry. I expect that witnesses today will further highlight these criticisms. 

One issue that could be affected by H.R. 2469, which was recently brought to my attention, and creates great concern, is the 

potential impact on local transportation authorities. I understand 

many of these organizations rely upon car rental tax revenues. I 

cannot speak to every variation of—or use of car rental revenues, 

but I can say with certainty that this funding is critical for transportation authorities in my district and in my state. 

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Along these lines, I am very interested in how H.R. 2469 would 

affect the ability of jurisdictions to use these taxes to fund local 

transportation authorities. For many years, and perhaps you have 

heard me say it, I have warned that the number one issue, in my 

opinion, plaguing transportation in America is vehicular congestion. To the extent these revenues are utilized to alleviate congestion, I believe they are being invested wisely. 

I appreciate the bipartisan support for H.R. 2469, and look forward to the testimony from our witnesses who are here today. I 

apologize to you all for my raspy voice. I have come down with my 

annual winter cold, so bear with me. Even though the weather outside is more like April than February. 

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Mr. COBLE. I recognize the distinguished gentleman from Tennessee, Mr. Cohen, for an opening statement. 

Mr. COHEN. Thank you. Thank you. Thank you, Mr. Coble. And 

welcome back. 

Mr. COBLE. Oh. Thank you, sir. 

Mr. COHEN. It is good to have you back where you belong, just 

like Kotter. 

Mr. COBLE. Thank you. 

Mr. COHEN. Yes. Thank you for holding this hearing as well. 

In the 111th Congress, this Subcommittee held a hearing on the 

earlier version of the bill that we consider today, H.R. 2469, the 

‘‘End Discriminatory State Taxes for Automobile Renters Act of 

2011,’’ which I introduced that year. The act prohibits future discriminatory state and local taxation of the rental of motor vehicles, 

the business of renting motor vehicles, or a motor vehicle rental 

property. And I am glad that Mr. Graves, from Missouri, worked 

with me on this bill this year. 

Importantly, the Act does not apply to discriminatory State or 

local car rental taxes already in effect, as the effective date of this 

bill, and those that have already been authorized or those that will 

be after the effective after—the effective date and afterwards. So, 

it has no impact on current State and local taxes. 

In 2010, I noted that States and localities often turn to discriminatory taxes on certain goods or services. That is, taxes that are 

higher than the generally applicable sales tax in—in the jurisdiction on other types of goods and services. This temptation to rely 

on discriminatory taxation is heightened in the case of taxes imposed on rental cars. 

As a former State senator and a county official, I understand 

why States and localities love car rental taxes. They seem like a 

relatively painless way for political officials to raise revenue, because of the widespread belief that these taxes primarily affect outof-towners, getting non-constituents to pay for local needs. Even 

though that is wrong, it does make it politically more feasible for 

them. 

State and local officials like to impose discriminatory taxes on 

car rentals, because there is no political accountability, they get the 

money, and they can go to the groundbreaking. 

Such thinking reminds me of an old saying that I used to hear 

from Leonard Donovant, of Millington, Tennessee, a fine member 

of the Tennessee State Senate, and a conservative member of the 

Tennessee Senate. He said, ‘‘Don’t tax me. Don’t tax thee. Tax that 

man behind that tree.’’ And, indeed, those are the people you are 

taxing. 

For consumers, discriminatory rental car taxes impose an unfair 

burden on them. Many of our constituents have faced a situation 

where an individual rents a car from a rental car company, is told 

the daily rate would be $25. By the time the bill comes due, however, the renter is often shocked to learn the actual charges are 

closer to $40 a day, after these taxes are added on. 

Over 1 week’s time, that is a difference of $105, from the quoted 

price, to the final bill, enough to persuade many from renting a car 

in the future, or from even traveling in the first place. Such an impact on the interstate traveler represents an unwarranted burden 

13 

on interstate commerce by local taxing authorities. Worse, the discriminatory State and local taxes on car rental for consumers are 

often used to build local sports stadia and convention centers not 

to benefit car rental consumers. 

We also learned during our hearing last Congress that car rental 

taxes may be regressive, because low-income and minority individuals end up paying a larger share of car rental taxes, relative to 

their population. This impact is stark. In Georgia, in 2008, households making $50,000 a year or less paid over $9 million in rental car taxes. Households making 

$25,000 a year or less, roughly the poverty line for a family of four, 

accounted for $3.5 million of that $9 million. 

Additionally, Caucasians who account for two-thirds of Georgia’s 

population paid less than half the car rental taxes. In contrast, African-Americans, who accounted for just 12 percent of Georgia’s 

population, generated one-quarter of rental car revenues, and 

shouldered 27 percent of the car rental tax burden. Minority 

groups, as a whole, bore 92 percent of the car rental tax burden. 

A broad range of groups have endorsed this legislation, including 

the National Consumers League, the United Auto Workers, the 

Global Business Travel Association, Americans for Tax Reform, the 

National Urban League, and the major automobile manufacturers 

as well. 

More than 117 discriminatory rental car taxes have been enacted 

in 43 States and the District of Columbia. It is time Congress put 

a halt to such taxation, which is discriminatory in several ways. 

So, I thank Congressman Graves for joining me in introducing 

the legislation. And I thank my predecessor in the Judiciary Committee, and in the House, Rick Boucher, a fine gentleman from Virginia, who introduced this bill prior to my taking over prime sponsorship. And he was the leader on it for quite a while. And I thank 

Chairman Coble for scheduling this hearing. And I thank our witnesses for participating. And I urge my colleagues to support this 

legislation. 

Mr. COBLE. I thank you, Mr. Cohen. And we also have on the 

panel today Mr. Gowdy, the distinguished gentleman from South 

Carolina, Mr. Quayle, the distinguished gentleman from Arizona, 

Mr. Polis, the distinguished gentleman from Colorado. Good to 

have you all here as well. 

I am now pleased to introduce our panelists. I will start with 

Sally Greenberg, who serves as the Executive Director of the National Consumers League, a position she has held since 2007. The 

mission of the NCL is to protect and promote social and economic 

justice for consumers, workers in the United States and abroad. 

Prior to her service at NCL, Ms. Greenberg worked at Consumers 

Union for 10 years on a variety of issues, including product liability 

and food safety issues. Her career also included positions at the 

U.S. Department of Justice and the Anti-Defamation League, in 

Boston. 

Dr. Brian Frederick is the Executive Director of the Sports Fan 

Coalition, a national non-profit organization dedicated to advocating issues of importance to sports fans. He’s also an adjunct professor at Georgetown University, where he teaches sports industry 

management. 

14 

Dr. Frederick earned his Ph.D. from the University of Colorado, 

at Boulder, and his master’s degree from UNC, at Chapel Hill, 

North Carolina. He completed his undergraduate work at the University of Iowa. 

Bio for Mr. Ray Warren. Mr. Warren is a Deputy Commissioner 

of Revenue for Arlington County, Virginia. His testimony today is 

on behalf of the National Association of Counties, the National 

League of Cities, the United States Conference of Mayors, and the 

Government Finance Officers Association. 

Mr. Warren has been a practicing attorney for 28 years, having 

earned his law degree and undergraduate degree from the University of North Carolina. This is North Carolina day, it appears. Good 

to have you all here as well. 

He also served 2 terms in the North Carolina General Assembly, 

and 7 years as a North Carolina Superior Court judge. He has 

taught law classes at UNC, Charlotte, and Marymount University, 

in Arlington. 

As an aside, Mr. Warren, where were you reared? What was your 

home county? 

Mr. WARREN. Mecklenburg County. 

Mr. COBLE. Pardon? 

Mr. WARREN. Mecklenburg County, sir. 

Mr. COBLE. Oh. From the big city area. 

Mr. WARREN. Absolutely. 

Mr. COBLE. Well, good to have you with us, Judge. 

And finally, the bio for Mr. Michael McCormick. Mr. McCormick 

serves as Executive Director of the Global Business Travel Association, a position he has held since August 2009. GBTA is a leading 

source for networking, advocacy, and—and education for business 

and government travel managers, buyers, and planners. 

Prior to his tenure at GBTA, Mr. McCormick spent more than 20 

years in the travel industry. Mr. McCormick earned his bachelor’s 

degree at the University of Notre Dame. Good to have you all with 

us. And I remember you now, Mr. Warren, as a Mecklenburger, 

since you refreshed my memory. 

Folks we will ask you all to keep a sharp lookout on the timer. 

It is on the desk. The light will go from green, to yellow, to red. 

And we try to comply with the 5-minute rule, if possible. Nobody 

will be keel-hauled if you violate it. But if you could wrap up when 

you see that yellow light appear, that is your warning that we have 

1 minute to go. And Mr. Cohen and I will try to practice the 5- 

minute rule against ourselves as well. 

So, Ms. Greenberg, if you will be our leadoff hitter. And thank 

you all for being with us. 

TESTIMONY OF SALLY GREENBERG, EXECUTIVE DIRECTOR, 

NATIONAL CONSUMERS LEAGUE 

Ms. GREENBERG. Well, thank you very much, Congressman. And 

I’m delighted to be here today. Thank you, Ranking Member 

Cohen, and Congressman Polis, and Congressmen Gowdy and 

Quayle. I really appreciate the opportunity to be here to talk to you 

about H.R. 2469. It is the End Discriminatory State Taxes for 

Automobile Renters Act of 2001. 

15 

I am, indeed, the Executive Director of the National Consumers 

League. We are the nation’s oldest consumer organization, founded 

in 1899. 

Mr. Chairman, consumers today feel that in many of their transactions they are being nickled and dimed constantly. Added fees 

are everywhere. The National Consumers League feels consumers’ 

pain. And rental car taxes top the list of the worst abusers. 

Don’t take it from me. ‘‘Consumer Reports,’’ in August 2010, ran 

a piece called, ‘‘Fees that Irk Consumers.’’ The worst case were the 

fees attached to a rental car. And as ‘‘Consumer Reports’’ puts it, 

‘‘But our hearts really go out to a couple who rented a compact car 

in Boston last summer. They paid $444 for 15 days of driving. And 

then came the rental vehicle surcharge, customer facility charge, 

parking surcharge, energy recovery fee, fleet recovery surcharge, 

concession recovery fee, and State tax.’’ So, we are here to say, we 

support the legislation, and also to say enough. 

H.R. 2469 will prospectively bar discriminatory car rental taxes, 

which are simply added fees imposed by States and localities. Now 

the bill will grandfather in existing taxes and not affect the ability 

of States and localities to impose general taxes that are levied on 

all citizens or business. 

According to the New York Times, the most common use of these 

rental car excise taxes is to finance sports stadiums and convention 

centers. The ‘‘Times’’ noted that at least 35 sports stadiums were 

expected to be financed partly with subsidies from car rental taxes. 

As of this time, 43 States and the District of Columbia have imposed 118 excise taxes on car rentals. This is eight times the number of these taxes that existed in 1990. 

A perfect example is Minneapolis. The Minnesota Vikings already have the Metrodome. But the Minnesota Vikings’ owner, 

Zigmunt Wilf—I may be pronouncing it wrong. The Vikings’ billionaire owner, he wants another stadium, with a retractable roof. And 

State lawmakers were asking consumers who rent cars to help pay 

for it with a 2.5 percent tax on rental cars to finance this new billion-dollar stadium. 

Interestingly, more than half of those who rent cars in Minnesota 

are residents of the State. So, to add insult to injury, Minnesota 

residents are already paying a special 6.2 percent excise tax on car 

rentals, a tax that was adopted to pay for the cost of the State trying to bring the Super Bowl. That tax was supposed to expire in 

2005, but it was extended, even though the revenue it raised has 

far exceeded its original purpose. Talk about fleecing the consumer. 

In addition, I want to talk for a moment about how nonprofit organizations experience the heavy taxes on rental cars. I have a 

staff of 16. When my people travel, or even have meetings locally 

and need transportation, we must often rent cars. Receipts from 

our car rentals over the past year tell the tale. 

In September of last year, I rented a car in Minneapolis. The 

base fee was $128. But the following taxes were added on. CFC, at 

$2 a day. $6. APCONGR fee, I have no idea what it was for, 

$14.33. State taxes of $10.86. Vehicle tax, $7.47. Rental tax, $9.26. 

Total, $176. So, 37 percent of the total cost in Minneapolis was fees 

and taxes. 

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I have another example in my testimony in renting a car in Chicago last year. I also paid 37 percent in total taxes for my rental 

there. My base rental was somewhere around $123. I also had no 

idea, when I paid these fees, what they were for. Nor do other consumers. The names of the taxes are indecipherable, maybe by design. 

Unfortunately, there are misconceptions about who rents cars. 

There is the myth that those that rent cars are from out of state, 

and, therefore, it is easy to impose taxes on people who are just 

passing through. In fact, a study by the Brattle Group said that 54 

percent of those who rent cars are actually in-state residents. 

This tax falls very heavily on—on African-Americans. They generate 26 percent of the rental car revenues, according to the same 

Brattle Group study, and pay 27 percent of the excise tax, despite 

accounting for only 12 percent of the population. 

So, in conclusion, with an 8-fold increase in taxes on rental cars 

since 1990, it seems clear that the multitude of fees, taxes, and 

charges have dramatically inflated the cost of renting a car. My organization, the National Consumers League, certainly understands 

the importance of citizens paying their fair share of taxes to provide critical services that we all rely on, our schools, hospitals, libraries, and roadways. We don’t—we don’t object to paying for 

those items. But what we do object to is paying for sports stadiums 

and taxes that have—that consumers have no idea what the tax is 

for, let alone what it is being used for. So, it is time to say enough 

is enough. 

For those reasons, the National Consumers League is pleased to 

offer our support for H.R. 2469. Thank you very much. 

[The prepared statement of Ms. Greenberg follows:] 

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Mr. COBLE. Due to the lady’s time has expired, Mr. Frederick? 

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TESTIMONY OF BRIAN FREDERICK, EXECUTIVE DIRECTOR, 

NATIONAL SPORTS FAN COALITION 

Mr. FREDERICK. Thank you, Chairman Coble, Ranking Member 

Cohen, Representative Quayle, Representative Polis. 

It is a great honor to speak to you on behalf of Sports Fans Coalition, where I am the Executive Director. Sports Fans Coalition is 

the largest non-profit advocacy organization in the country for fans. 

We are a bipartisan organization, founded by members of the Clinton and Bush White Houses to give sports fans a voice on public 

policy issues. 

We urge your support on this bill today, because rental car taxes 

are one of the primary ways that sports team owners are able to 

manipulate public—public dollars into private profit. Experts 

across the political spectrum agree that these stadiums provide little to no economic benefit for the community, and only serve to increase the value of the franchise. 

The rental car taxes that help finance stadiums are assumed to 

be paid by non-residents, but, in fact, more residents rent cars than 

non-residents. Eliminating these excise taxes will help shift the responsibility back toward the sports teams’ owners to privately finance stadiums. 

Mr. Chairman, let me state that I do not wish to sit up here and 

single out the NFL or any particular owner. These owners are all 

playing by the same rules that everybody—everyone else is, and 

the leagues are—are playing by the same rules as well. 

But this weekend, the Super Bowl will be played in Lucas Oil 

Stadium, in Indianapolis. The stadium opened in 2008, and cost 

$720 million, of which the public was supposed to pay 87 percent 

through taxes on hotels, and food, and a tax on rental cars. 

For his part, Indianapolis Colts’ owner, Jim Irsay, kicked in $100 

million, although $48 million of that came from the public buying 

out the Colts’ lease on the RCA Dome. So, the public share was actually more like 92 percent. 

Irsay and the Colts also receive around $14 million per year for 

advertising in the stadium, $25 million for luxury seating, and $6 

million for the naming rights of the stadium, all while paying nothing in rent. 

Situations not unique to Indianapolis. Last year the Super Bowl 

was played in Cowboy’s stadium in Arlington, Texas. That stadium 

opened in 2009, and cost $1.2 billion, of which the public paid at 

least $440 million, or 37 percent, in part, through a 5 percent increase in Arlington’s car rental tax. 

Several other arenas—— 

Mr. COBLE. Dr. Frederick, if you would suspend for a moment. 

Mr. FREDERICK. Sure. 

Mr. COBLE. I appreciate what you are saying, but this is not an 

NFL operation. Try to confine this to the—to the bill at hand. 

Mr. FREDERICK. Absolutely. I am sorry, Mr. Chairman. My point 

was to give examples of how the public dollars were being pushed 

toward these particular NFL stadiums. I will say that in some situations, like in Kansas City, where Kansas City built a downtown 

arena, even though it didn’t have a particular team, the public 

ended up spending $276 million, paid for entirely by hotel and car 

27 

rental fees. To this day, 5 years later, they still don’t have a—a 

team. 

So, how this plays out for the consumer like me, as—as the head 

of one of the largest sports fans organizations, and considering that 

sports fans are one of the biggest consumer groups, if I were to fly 

home to Kansas this weekend to watch the Jay Hawks and the Tigers, renting an economy car at Kansas City Airport at a base rate 

of $11 per day for 3 days, I would pay $33 for the car, and $42.84 

in tax—taxes and fees. So, that is an increase of 129 percent, giving me a total bill of $75.84 for a—16 percent of that would be 

going toward the Sprint Center, even though I am not seeing a 

game there, nor are there any actual teams that play there. As a 

result, I no longer rent cars when I return home to Kansas City. 

So, these excise taxes and car rentals enable local politicians and 

stadium supporters to claim the costs of building a new—new stadium will be born by out-of-town visitors. Indeed, these taxes are 

often referred to as tourism taxes. But while hotel rooms are primarily rented by out-of-towners, a June 2010 study, conducted by 

the Brattle Group, found that 54 percent of the total revenues generated from car—rental cars were from home city rentals. In other 

words, just over half the cars were rented by local residents. 

As Representative Cohen pointed out, while car rental excise 

taxes may seem like an attractive option for shifting the burden of 

paying for a stadium onto non-residents, in truth, residents bear 

the majority of the burden. So, because sports fans are often manipulated into paying for stadiums in order to keep their favorite 

teams in town, and often wind up paying these costs through rental car taxes, Sports Fans Coalition is pleased to offer our support 

for H.R. 269. It is legislation that is long overdue, and we urge you 

to support it. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Frederick follows:] 

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Mr. COBLE. Thank you, Mr. Frederick. 

Mr. Warren? 

TESTIMONY OF RAYMOND A. WARREN, DEPUTY COMMISSIONER OF REVENUE AND LEGAL COUNSEL, ARLINGTON, 

VA, ON BEHALF OF NATIONAL ASSOCIATION OF COUNTIES, 

THE NATIONAL LEAGUE OF CITIES, THE UNITED STATES 

CONFERENCE OF MAYORS, AND THE GOVERNMENT FINANCE OFFICERS ASSOCIATION 

Mr. WARREN. Good afternoon, Chairman Coble. Good to see you 

again. Mr. Cohen. Representative Cohen. Representative Polis. 

Thank you for having us here today. 

My name is Ray Warren. I am a Deputy Commissioner of Revenue, and legal counsel to the elected commissioner of revenue in 

Arlington, Virginia. She is, in essence, the tax assessor. 

I am pleased to submit testimony on behalf of the National Association of Counties, the National League of Cities, the United 

States Conference of Mayors, and the Government Finance Officers 

Association. The above organizations respectfully oppose H.R. 2469, 

the ‘‘End Discriminatory State Taxes for Automobile Renters Act of 

2011,’’ for several reasons. 

First, the operative part of the proposed legislation provides that 

no State or locality may levy or collect a discriminatory tax on the 

rental of motor vehicles, the business of renting motor vehicles, or 

motor vehicle rental property. The determination that a tax is discriminatory is made without any reference to the factors that State 

and local policymakers use to evaluate the local needs and best 

manner to distribute the tax burden. Nor does the determination 

that the tax is discriminatory take into account offsetting exemptions. 

For example, in Virginia, we exempt the inventory of rental vehicle companies from what is a fairly significant vehicle property tax. 

As a result, rental car companies do not pay the property tax. They 

are also exempt from the sales tax in Virginia. These tradeoffs are 

not accounted for in the bill, and in our case, they are actually sort 

of favorable to the industry. 

The congressional mandate determines that discrimination exists 

by reference to other items of business subject to the tax, without 

evidence of the differences that may exist in those items or businesses. 

For example, the bill attempts to compare taxes levied on all 

other commercial and industrial taxpayers, instead of other retailers. Yet, common sense dictates that different taxes are imposed on 

retail sales than on manufacturing. Indeed, it is unclear if the ordinary sales tax, a mainstay of local finance, would be held discriminatory if a similar apples-to-orange test was applied to it. 

Second, the vague language of the preemption proposal and the 

lack of an administrative agency that can issue interpretative rulings leaves it to the courts to determine what the law means. This 

would lead to expensive litigation and result in fiscal and budget 

uncertainty, at a significant cost to taxpayers. It is a very cumbersome process that may result in different definitions in different 

jurisdictions. It will be virtually impossible for a uniform set of 

37 

rules to be developed in a reasonable period of time, because of the 

nature of trial court and appellate litigation. 

Thirdly, over the past year, States and local governments have 

witnessed a parade of various industries coming forward to request 

that Congress preempt State and local government taxing authority for their particular industry. First, the telecommunications industry, the hotel industry, and today, the rental car industry. 

The members of the organizations for which I speak have always 

maintained that any industry’s plea for Federally mandated tax favoritism would open the door to other industries asking Congress 

for similar exemptions. This is what we are now witnessing. 

H.R. 2469 and other legislation of its kind pose a dire threat not 

merely to State and local tax revenues, but to the entire existence 

of independent State and local taxing authority in our system of 

federalism. 

Finally, the fundamental principle of federalism vests States and 

local governments with the responsibility for providing services and 

raising funds needed to pay for these services. Fees may be placed 

on cars rented for airport locations that are used for capital improvements and tourism campaigns that directly benefit rental car 

companies themselves. 

Rental car taxes are also imposed throughout this country by cities, counties, and states, with the proceeds used to pay for a variety of governmental services and programs. 

For example, Revere, Massachusetts, uses the rental—the revenue from rental car taxes to build police and fire stations. Cleveland, Ohio, and Schaumburg, Illinois, divert their tax dollars to 

their general fund, to assist with a host of operating expenses. Kenosha, Racine, and Milwaukee Counties, in Wisconsin, have used 

their revenue to expand their commuter rail system. 

King County, Washington, uses its revenue to fund sports— 

sports programs that keep youth focused on positive activities and 

off the streets. And finally, my county, Arlington County, Virginia, 

allocates its rental car tax revenue to the general fund. Among the 

services funded by the revenue are street maintenance and the provision of police, firefighter, and emergency services to Reagan National Airport, the Pentagon, Arlington National Cemetery, and 

other venues frequented by rental car users. 

For the above reasons—the above examples illustrate the longstanding principle of federalism. And for the above reasons, we 

urge Congress not to encroach upon this important principle. So, 

once again—— 

And I see my time is up, and I do want to honor that, Mr. Chairman. 

So, once again, I would say, based on federalism, and the use of 

these taxes, and the opportunity for local governments to make 

local decisions, we urge you to oppose this legislation. 

[The prepared statement of Mr. Warren follows:] 

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Mr. COBLE. Thank you, Mr. Warren. 

Mr. McCormick? 

TESTIMONY OF MICHAEL W. McCORMICK, EXECUTIVE 

DIRECTOR, GLOBAL BUSINESS TRAVEL ASSOCIATION 

Mr. MCCORMICK. Mr. Chairman, Members of the Committee, on 

behalf off the Global Business Travel Association, I appreciate the 

opportunity to testify in support of H.R. 2469. I also appear before 

you as a member of the Coalition Against Car Rental Excise Taxes, 

which includes consumers, unions, tax reformers, auto dealers, 

auto renters, and manufacturers. 

For years, GBTA and its members have opposed discriminatory 

car rental taxes in their communities. Our members appreciate the 

Committee’s willingness to consider an effective uniform remedy to 

discriminatory car taxes. 

First, a snapshot of the industry. The business travel sector, 

which includes transportation, lodging, entertainment, meals, 

meetings, and conventions, is a significant component of the U.S. 

and world economies. 

Domestically, 8 million Americans work and travel in tourism-related businesses. In 2011, U.S. spending on business travel topped 

$250 billion. Worldwide, over a trillion dollars was spent on business travel and meetings. 

GBTA actively tracks and reports on business travel trends. Despite a steep decline during the recession, our latest projections 

show business travel maintaining upward trajectory in 2012. We 

expect corporations to increase their domestic travel spend, and increase international travel spend by almost 8 percent, to $34 billion. This followed a 9 percent growth in international travel spend 

in 2011. 

So, in short, after these increases in the last 3 years, you can 

think of it that we just hit the reset button on business travel. We 

will finally climb our way back to pre-recession levels of business 

travel in 2012. 

And because we know—now know that new jobs follow increases 

in business travel spend, this is good news. The reason is simple. 

When businesses are confident in a growing economy, they send 

their employees on the road to secure even more business. The result is increases in the travel sector and a positive ripple effect 

throughout the economy. 

We project that domestic U.S. business travel sector, however, to 

lag international growth. Partly, this is due to continuing economic 

challenges in the United States. However, policy, tax, and funding 

decisions made by Congress can have major impacts on the growth 

of domestic business travel, an industry vital to the U.S. economic 

recovery. 

So, in sort, it is all about creating headwinds, or tailwinds, for 

the economy. And an enactment of H.R. 2469 represents one of 

those policy decisions. 

Currently, governments in 43 States and the District of Columbia levy 118 different excise taxes on car rentals in various jurisdictions. States, cities, and counties can often justify the fees by citing 

budgetary constraints. While sometimes true, this phenomenal 

eight times increase in taxes and fees began in 1990, which preVerDate Aug 31 2005 10:36 Jun 12, 2012 Jkt 000000 PO 00000 Frm 00047 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\020112\72691.000 HJUD1 PsN: DOUGA
44 

dates the current downturn. And these fees have nothing to do 

with travel, security, or core government operations. The fees are 

added by local politicians, because, as Mr. Cohen stated, they 

wrongly think it only impacts business travelers who are out-oftown voters. 

Business travel buyers pay careful attention to discriminatory 

taxes. Congress does not need to pour over economic studies to 

know that travel demand is elastic. As prices increase, and in this 

case, artificially, travel demand decreases. 

So, to be clear, GBTA is not opposed to reasonable taxes or service charges that finance the cost associated with travel. We understand that a safe efficient transportation infrastructure requires 

funding. But business travelers, already a significant driver of revenue, should not be the financing source for new sports stadiums, 

museums, or performing art centers, or an attempt to offset new 

unplanned deficits. 

So, in conclusion, increasing business travel costs through unfair 

State and local car rental taxes hurts businesses, their travelers, 

and the economy as a whole. 

Mr. Chairman, thank you for your time to speak in favor of the 

End of Discriminatory State Taxes for Automobile Renters Act of 

2011. And thank you again for your time and your efforts. I look 

forward to answering any questions. 

[The prepared statement of Mr. McCormick follows:] 

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Mr. COBLE. Thank you again for your attendance here. And since 

this is the gentleman from Tennessee’s bill, I am going to give him 

the courtesy of kicking—kicking it off. Keep in mind, folks, we try 

to impose the 5-minute rule against us as well. So, if you can keep 

your responses terse, that would be appreciated. 

The gentleman from Tennessee. 

Mr. COHEN. Thank you, sir. I appreciate your courtesy. 

Ms. Greenberg, Mr. Warren, in his testimony, concentrated on 

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never even got around to regressivity, and that this is a most serious regressive tax. 

Would you talk to us a little bit about how regressivity affects 

Virginians? 

Ms. GREENBERG. Well, so those who rent vehicles often do so, because, we have already pointed out, they are often in-state residents. And they do so, because they can’t afford to own a—a vehicle. And they may be taking a child to a sports event, or they may 

visit an elderly parent in a nursing home. 

Mr. COHEN. To the doctor. They could be—— 

Ms. GREENBERG [continuing]. Relative to the hospital. 

Mr. COHEN. They could save their life. 

Ms. GREENBERG. Right. And so there are multiple uses and consumers who can’t afford a car have to rent a car for special occasions or emergencies. And as a result, those people end up paying 

these really onerous taxes. No, it is not a progressive tax, it is a 

very regressive tax, because it is not adjusted to the person’s income. 

One of the studies we quoted said that various groups, including 

African-Americans, rent a disproportionate number of cars, and 

they pay these high taxes, and the benefits doesn’t necessarily 

come back to them. 

So, yes, we do believe this is a very regressive tax. But the taxes 

on rental cars, and there are—as—as my testimony indicated, 

there are many, are very regressive, and we would much prefer to 

see States and localities—we don’t oppose their—their raising— 

their imposing taxes. We would much prefer to see those being put 

in a—a progressive taxation system, rather than this very regressive tax. 

Ms. COHEN. Thank you, Ms. Greenberg. Mr. McCormick, further 

in Mr. Warren’s testimony, he talked about the fact that Virginia 

exempts an inventory of rental vehicle companies from a fairly significant property tax, as well as the rental of vehicles from the 

State’s sales-and-use tax. He says the Bill makes no allowance for 

this tradeoff, which is rather favorable to the industry. 

Does he make the—miss the point that what they are giving to 

the industry is the industry. What we are talking about here is the 

consumer, and that the individual traveler pays for this, and would 

get no benefit necessarily, even though there could be a passthrough, determined on the company, on these quote, unquote, 

tradeoffs. 

Mr. MCCORMICK. Yes. Clearly, our focus is that the business 

traveler and the—and the consumer, and in this case, I mean you 

are right, the taxes that—that they are paying are artificially, you 

know, depressing business travel, having an impact on the consumer. People are paying exorbitant, you know, fees and taxes over 

and above what they are expecting. And it really is one, to me, has 

nothing to do with the other. It is not the issue. 

Mr. COHEN. Thank you. Mr. Frederick, you—you are well aware 

of the fact, and I think—I think it was in your testimony as well, 

that—that most of these taxes are, in fact, paid by local folk, and 

they are regressive. But a lot of them are paid with the—and even 

though, as Mr. Warren said, some—they take it to the general fund 

49 

in Virginia, et cetera, et cetera, but that most of them are for stadia. 

All the owners of these teams, and—and the people that build 

these stadiums, and they can be NBA, which they have in Memphis, or NFL, or whatever, they are all in favor of that, are they 

not, to let somebody else, don’t tax me, don’t tax thee, tax that guy 

behind that tree? 

Mr. FREDERICK. Absolutely. The—the owners of any team are— 

are more than willing to let the public pay for the costs of building 

the stadium, while at the same time, reaping the profits from that 

stadium. 

And as I said, you know, most the experts that have looked at 

this have said that all that these stadiums do is to move money 

around, and to increase the value of the franchise, but not to really 

degenerate any new economic revenue. 

Mr. COHEN. And I see him at the yellow, but we hadn’t gotten 

to the red, and I don’t know—but he also says in his testimony the 

tax burden on some consumers might relieve the burden on others 

would surely be exacerbated, as States find ways to recoup lost revenue to fund these type programs. 

Would it be so awful to exacerbate the tax burden on the multi- 

, multi-, multi-millionaires and billionaires who own these teams, 

none of whom seem to be missing any opportunity to go to Tiffany’s, with maybe—and—and whatever they want, or whatever 

they want to do, and buy another team, or get a quarterback, or 

if they don’t like Peyton, they might even trade and try to get Eli. 

[Laughter.] 

Mr. FREDERICK. Absolutely, Rank—Representative Cohen. And 

I—I would say that one of the—one of the drawbacks to these taxes 

is that, because they are regressive, the very same people who can’t 

afford tickets to go into the stadium are the same ones that pay 

more for—for the rental car taxes. 

Mr. COHEN. Thank you, members of the panel. And thank you, 

Mr. Coble. 

Mr. COBLE. Thank you, Mr. Cohen. Appreciate that. We have 

been joined by the distinguished gentleman from Georgia, Mr. 

Johnson. Good to have you with us. 

Ms. Greenberg, do you believe it is unfair that automobile rental 

taxes go oftentimes to support or construct stadiums and other 

non—non-related tax matters or transit matters? 

Ms. GREENBERG. Yes, we do. And I certainly said that in my testimony. One of the things we point out is that we don’t object to 

States and localities raising taxes for critical services like building 

hospitals, or roads, or schools. But to ask the average consumer 

who rents a car to pay the cost of a stadium which he or she may 

never be able to use, people—even tourists coming in from out of 

state, may never have the opportunity to use those stadiums, I 

think is unfair, and it is regressive, and that is why we support 

this legislation. 

Mr. COBLE. Thank you. Mr. Warren, if Mr. Graves, and Mr. 

Cohen’s bill is enacted, would H.R. 2469 prohibit all taxes on rental 

cars or only new taxes? 

Mr. WARREN. Well, Chairman Coble, two things. It—it—it is a 

prospective bill. So, in theory, a—a jurisdiction such as Arlington 

50 

would be able to keep its tax, but we could never change it. Moreover, the surrounding Northern Virginia communities, which may 

not have enacted one, would not be able to enact one. 

Insofar as what could be enacted, and not be quote, unquote, discriminatory, I don’t now the answer to that. We have a 1 percent 

in Virginia. Some locations have a 1 percent daily rental tax on 

things other than automobiles. Would it be—it would be allowed 1 

percent. But then we also have the 5 percent sales tax. Would that 

be a comparable tax? 

And one of the problems with this bill is, it is very difficult to 

know how a court is going to compare A with B to come up with 

is it or is it not discriminatory. And the problem is, without an administrative agency to—to rule on this, you may—and you and I 

practice in the same area, we are attorneys—you may have a different ruling in the fourth circuit, in the third circuit. It is going 

to be a mess for everybody. 

Mr. COBLE. Thank you, Mr. Warren. Mr. McCormick, States have 

a Tenth Amendment right to set their own tax policies, presumably. And if that is the case, some will say, well, why should the 

Congress interfere with State tax policy in purely intrastate issues. 

What do you say to that? 

Mr. MCCORMICK. Well, I really go back to my earlier statements, 

which is, I think when we look at the taxes that are being levied, 

and they are, you know, discriminatory, and—and just, you know, 

in some cases, outright ridiculous, in—in terms of their proportion 

to the cost of the rental, I think we need to take action. We can’t 

leave it to the local jurisdictions to make those decisions. 

There are plenty of opportunities to collect tax revenues. There 

are plenty of opportunities to collect appropriate tax revenues on 

car rental. But we are looking to just look at—at ways to protect 

the consumer and the business traveler from exorbitant ones. 

Mr. COBLE. Dr. Frederick, do you want to add anything to that? 

Mr. FREDERICK. I agree with him. Yes. 

Mr. COBLE. Okay. 

Mr. FREDERICK. Thank you. 

Mr. COBLE. I want you all to take judicial notice. I am beating 

the red light before it illuminates. [Laughter.] 

I am pleased to recognize the distinguished gentleman from 

Georgia for 5 minutes. 

Mr. JOHNSON. Yes. I kind of like the title of this, the—we are— 

we are looking to protect consumers from discriminatory State 

taxes on motor vehicle rentals. And while we—when we invoke the 

specter of discrimination, we talk about people who live in the cities. And I think, for the most part, intercity residents are assumed 

to be African-Americans and other minorities. So, we get a picture 

of protection of minorities against taxes that discriminate against 

them. 

This is just my perception of what we are dealing with. And— 

and so, those things being assumed as true, it—it kind of makes 

you want to protect those persons, particularly African-Americans, 

since I am African-American, you know, from being discriminated 

against. 

And I guess what I want to know is, and, of course, the Act itself 

does not describe a discriminatory tax in that way, but that is my 

51 

perception, given what we have heard today, and the title of the 

Act, and the purpose of the Act. 

Is there any—can anybody cite any evidence as to discrimination, 

in the classic sense of the word, that is directed at a particular 

class of individuals that this act is protecting? 

Who is it really protecting, in other words? Is it protecting the 

car rental companies from having to charge a tax, thus pricing, 

perhaps, their product out of the means of—of people, or is it protecting people who have to pay the tax? What are we really trying 

to do here, so that we can make sure we understand the exact intent? 

Mr. WARREN. Representative, if I could, this tax brings in $5.4 

million to Arlington County. We do not have any rich sports moguls. Well, we may have them there, but I don’t know how we are 

going to tax them, because their stadiums are not there. We tried 

for National Stadium. We didn’t get it. 

If we were to lose this money, we would have just two choices. 

Raise the personal property tax on—on vehicles of ordinary citizens, or raise their real estate property taxes. 

Now, we have a historically Black community in Arlington, and 

people are losing their houses, because they cannot afford the 

taxes. So, when you get rid of this tax, you basically just shift the 

burden from some taxpayers. And I can guarantee you, the people 

in Crystal City, mostly renting these cars, are over here to lobby 

Congress to spend money on Federal contracts. They are not the 

poor people of Arlington. But a lot of middle class and poor people 

in Arlington do pay the real estate property tax, and they would 

be negatively impacted by the loss of this revenue. 

Mr. JOHNSON. Well, what you are pretty much saying is that 

your car rental taxes don’t go to pay for stadiums for millionaires 

and billionaires. They go for other purposes like roads, and hospitals, and schools, and—and whatnot. Is that what you are arguing? 

Mr. WARREN. Yes, sir. It goes into our general fund. It—it pays 

for—for roads. It pays for the firefighters. If you remember, in 9/ 

11, it was the Arlington County firefighters who responded to the 

Pentagon. 

Mr. JOHNSON. Well, tell me this, in your jurisdiction, is it just 

minorities, intercity residents who are having to pay the tax—the 

car rental tax, or is it some other group of—or some other demographic? 

Mr. WARREN. Frankly, Representative Johnson, it really does discriminate pretty heavily against lobbyists. They pay a lot of the 

taxes. But other than that, I certainly don’t think in Arlington 

County, which is a very diverse community, that minorities pay a— 

a disproportionate fair—part of this tax. I do believe that the general fund contribution benefits minorities and others in Arlington 

County. 

Mr. JOHNSON. Well, Mr. Warren, I have been accused—because 

I can deliver a—a humorous line without smiling, I have been accused of being stupid. And I am glad to know that I have a fellow 

stupendous individual sitting right in front of me that I have been 

talking to during this hearing, and has been responding to my 

52 

questions. So, thank you very much, sir, for your stupendous qualities. 

Mr. WARREN. Thank you. 

Mr. COBLE. And Mr. Johnson, I hope it won’t erase that smile, 

but your red light has illuminated. [Laughter.] 

Mr. JOHNSON. Well, that does cause me to smile. 

Mr. COBLE. Very good. Folks, again, thank you all for being here. 

I appreciate very much your time and your testimony today. 

Without objection, all Members will have 5 legislative days to 

submit to the Chair additional written questions for the witnesses, 

which we will forward, and ask the witnesses to respond as 

promptly as they can, so that their answers may be made a part 

of the record. 

Without objection, all Members will have 5 legislative days to 

submit any additional materials for inclusion in the record. 

With that, again, I thank the witnesses. 

And this hearing stands adjourned. 

[Whereupon, at 2:22 p.m., the Subcommittee was adjourned.] 

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A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

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Letter from Josh Nassar, Legislative Director, International Union, United 

Automobile, Aerospace & Agricultural Implement Workers of America 

(UAW) 


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Letter from Thomas M. James, President and CEO, Truck Renting and 

Leasing Association (TRALA) 


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Prepared Statement of the Federation of Tax Administrators, and 

Government Finance Officers Association 


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Letter from Bob Barton, President, 

the American Car Rental Association (ACRA) 


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Prepared Statement of Matt Blunt, 

President of the American Automotive Policy Council (AAPC) 


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Prepared Statement of the Interactive Travel Services Association (ITSA), 

and the Business Travel Coalition (BTC) 


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Letter from Richard D. Broome, Senior Vice President, 

Corporate Affairs & Communications, The Hertz Corporation 


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Letter from Charles M. Loveless, Director of Legislation, the American 

Federation of State, County and Municipal Employees (AFSCME) 

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Prepared Statement of Jeffrey Friedman, Sutherland, 

Asbill & Brennan LLP 


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