II 

110TH CONGRESS 

1ST SESSION S. 914 

To authorize the States (and subdivisions thereof), the District of Columbia, 

territories, and possessions of the United States to provide certain tax 

incentives to any person for economic development purposes. 

IN THE SENATE OF THE UNITED STATES 

MARCH 19, 2007 

Mr. VOINOVICH (for himself, Mr. MCCONNELL, Mr. ALEXANDER, Mr. BOND, 

Mr. BURR, and Mr. SMITH) introduced the following bill; which was read 

twice and referred to the Committee on Finance 

A BILL 

To authorize the States (and subdivisions thereof), the District of Columbia, territories, and possessions of the 

United States to provide certain tax incentives to any 

person for economic development purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Economic Development 

5 Act of 2007’’. 

6 SEC. 2. AUTHORIZATION. 

7 Congress hereby exercises its power under Article I, 

8 Section 8, Clause 3 of the United States Constitution to 

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1 regulate commerce among the several States by author2 izing any State to provide to any person for economic de3 velopment purposes tax incentives that otherwise would be 

4 the cause or source of discrimination against interstate 

5 commerce under the Commerce Clause of the United 

6 States Constitution, except as otherwise provided by law. 

7 SEC. 3. LIMITATIONS. 

8 (a) TAX INCENTIVES NOT SUBJECT TO PROTECTION

9 UNDER THIS ACT.—Section 2 shall not apply to any State 

10 tax incentive which— 

11 (1) has a requirement regarding State or coun12 try of incorporation, commercial domicile, or resi13 dence of an individual; 

14 (2) requires the recipient of the tax incentive to 

15 acquire, lease, license, use, or provide services to 

16 property produced, manufactured, generated, assem17 bled, developed, fabricated, or created in the State; 

18 (3) is reduced or eliminated as a direct result 

19 of an increase in out-of-State activity by the recipi20 ent of the tax incentive; 

21 (4) is reduced or eliminated as a result of an 

22 increase in out-of-State activity by a person other 

23 than the recipient of the tax incentive or as a result 

24 of such other person not having a taxable presence 

25 in the State; 

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1 (5) results in loss of a compensating tax sys2 tem, because the tax on interstate commerce exceeds 

3 the tax on intrastate commerce; 

4 (6) requires that other taxing jurisdictions offer 

5 reciprocal tax benefits; or 

6 (7) requires that a tax incentive earned with re7 spect to one tax can only be used to reduce a tax 

8 burden for or provide a tax benefit against any other 

9 tax that is not imposed on apportioned interstate ac10 tivities. 

11 (b) NO INFERENCE.—Nothing in this section shall be 

12 construed to create any inference with respect to the inva13 lidity under the Commerce Clause of the United States 

14 Constitution of any tax incentive described in this section. 

15 SEC. 4. DEFINITIONS; RULE OF CONSTRUCTION. 

16 (a) DEFINITIONS.—For purposes of this Act— 

17 (1) COMPENSATING TAX SYSTEM.—The term 

18 ‘‘compensating tax system’’ means complementary 

19 taxes imposed on both interstate and intrastate com20 merce where the tax on interstate commerce does 

21 not exceed the tax on intrastate commerce and the 

22 taxes are imposed on substantially equivalent events. 

23 (2) ECONOMIC DEVELOPMENT PURPOSES.—The 

24 term ‘‘economic development purposes’’ means all le25 gally permitted activities for attracting, retaining, or 

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1 expanding business activity, jobs, or investment in a 

2 State. 

3 (3) IMPOSED ON APPORTIONED INTERSTATE

4 ACTIVITIES.—The term ‘‘imposed on apportioned 

5 interstate activities’’ means, with respect to a tax, a 

6 tax levied on values that can arise out of interstate 

7 or foreign transactions or operations, including taxes 

8 on income, sales, use, gross receipts, net worth, and 

9 value added taxable bases. Such term shall not in10 clude taxes levied on property, transactions, or oper11 ations that are taxable only if they exist or occur ex12 clusively inside the State, including any real prop13 erty and severance taxes. 

14 (4) PERSON.—The term ‘‘person’’ means any 

15 individual, corporation, partnership, limited liability 

16 company, association, or other organization that en17 gages in any for profit or not-for-profit activities 

18 within a State. 

19 (5) PROPERTY.—The term ‘‘property’’ means 

20 all forms of real, tangible, and intangible property. 

21 (6) STATE.—The term ‘‘State’’ means each of 

22 the several States (or subdivision thereof), the Dis23 trict of Columbia, and any territory or possession of 

24 the United States. 

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1 (7) STATE TAX.—The term ‘‘State tax’’ means 

2 all taxes or fees imposed by a State. 

3 (8) TAX BENEFIT.—The term ‘‘tax benefit’’ 

4 means all permanent and temporary tax savings, in5 cluding applicable carrybacks and carryforwards, re6 gardless of the taxable period in which the benefit 

7 is claimed, received, recognized, realized, or earned. 

8 (9) TAX INCENTIVE.—The term ‘‘tax incentive’’ 

9 means any provision that reduces a State tax burden 

10 or provides a tax benefit as a result of any activity 

11 by a person that is enumerated or recognized by a 

12 State tax jurisdiction as a qualified activity for eco13 nomic development purposes. 

14 (b) RULE OF CONSTRUCTION.—It is the sense of 

15 Congress that the authorization provided in section 2 

16 should be construed broadly and the limitations in section 

17 3 should be construed narrowly. 

18 SEC. 5. SEVERABILITY. 

19 If any provision of this Act or the application of any 

20 provision of this Act to any person or circumstance is held 

21 to be unconstitutional, the remainder of this Act and the 

22 application of the provisions of this Act to any person or 

23 circumstance shall not be affected by the holding. 

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1 SEC. 6. EFFECTIVE DATE. 

2 This Act shall apply to any State tax incentive en3 acted before, on, or after the date of the enactment of 

4 this Act. 

Æ 

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