I 

112TH CONGRESS 

1ST SESSION H. R. 1737 

To amend the Internal Revenue Code of 1986 to reduce the Federal tax 

on fuels by the amount of any increase in the rate of tax on such 

fuel by the States. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 5, 2011 

Mr. GARRETT (for himself, Mr. BISHOP of Utah, Mr. BURTON of Indiana, Mr. 

CHAFFETZ, Mr. WESTMORELAND, Mr. FRANKS of Arizona, Mr. KING of 

Iowa, Mr. DESJARLAIS, Mr. RIBBLE, Mr. ROE of Tennessee, Mr. 

WALBERG, Mr. HUIZENGA of Michigan, Mr. MULVANEY, Mr. LAMBORN, 

Mr. DUNCAN of South Carolina, Mr. GOHMERT, Mr. FLORES, Mr. FLEMING, and Mr. WILSON of South Carolina) 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 reduce 

the Federal tax on fuels by the amount of any increase 

in the rate of tax on such fuel by the States. 

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; ETC. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Surface Transportation and Taxation Equity Act’’ or as 

6 the ‘‘STATE Act’’. 

7 (b) PURPOSES.—The purposes of this Act are to— 


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1 (1) return primary transportation program re2 sponsibility and taxing authority to the States, 

3 (2) free States’ transportation dollars from 

4 Federal micromanagement, earmarking, and budg5 etary pressures, 

6 (3) enable decisions regarding which infrastruc7 ture projects will be built, how they will be financed, 

8 and how they will be regulated to be made by per9 sons best able to make those decisions, 

10 (4) eliminate the current system in which a 

11 Federal gasoline tax is sent to Washington and 

12 through a cumbersome Department of Transpor13 tation bureaucracy, 

14 (5) prohibit the Federal Government from forc15 ing unwanted mandates on States by threatening to 

16 withhold transportation money, and 

17 (6) achieve measurable congestion mitigation 

18 and infrastructure preservation and safety in a cost 

19 effective way subject to available resources. 

20 SEC. 2. FEDERAL TAX ON FUELS DECREASED BY AMOUNT 

21 OF INCREASE IN STATE TAX ON FUEL. 

22 (a) IN GENERAL.—Subpart B of part III of sub23 chapter A of chapter 32 of the Internal Revenue Code of 

24 1986 (relating to special provisions applicable to fuels tax) 

25 is amended by adding at the end the following new section: 


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1 ‘‘SEC. 4106. REDUCTION IN RATES OF TAX BASED ON IN2 CREASE IN STATE TAX RATE. 

3 ‘‘(a) IN GENERAL.—Under regulations prescribed by 

4 the Secretary, the rate of tax imposed under section 4081 

5 with respect to any fuel and the rate of tax imposed under 

6 section 4041 with respect to any liquid shall be decreased, 

7 but not below 2 cents per gallon, by the applicable State 

8 tax rate increase with respect to such fuel or liquid. 

9 ‘‘(b) APPLICABLE STATE TAX RATE INCREASE.— 

10 For purposes of this section, the term ‘applicable State 

11 tax rate increase’ means, with respect to any fuel or liquid, 

12 the excess, as periodically determined under tables pre13 scribed by the Secretary, of— 

14 ‘‘(1) the rate of tax imposed by the applicable 

15 State on the sale or use of such fuel or liquid, over 

16 ‘‘(2) the rate of tax imposed by the applicable 

17 State on the sale or use of such fuel or liquid as of 

18 the date of the introduction of the STATE Act. 

19 Any increase in the rate of tax imposed by any applicable 

20 State on the sale or use of any fuel or liquid shall be taken 

21 into account under this subsection only if State law pro22 vides that such increase is to be taken into account under 

23 this subsection. 

24 ‘‘(c) APPLICABLE STATE.—For purposes of this sec25 tion, the term ‘applicable State’ means the State which 


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1 is determined under regulations prescribed by the Sec2 retary as— 

3 ‘‘(1) in the case of a liquid to which section 

4 4041 applies, the State in which such liquid is sold 

5 or used, or 

6 ‘‘(2) in the case of a fuel to which section 4081 

7 applies, the State in which such fuel is most likely 

8 to be sold or used. 

9 ‘‘(d) REQUIREMENT TO MAINTAIN INTERSTATE

10 HIGHWAY SYSTEM.—Subsection (a) shall not apply with 

11 respect to any fuel or liquid if the applicable State with 

12 respect to such fuel or liquid has not entered into an 

13 agreement with the Secretary of Transportation under 

14 which such State has agreed to provide for the proper 

15 maintenance of that portion of the interstate highway sys16 tem which is within such State.’’. 

17 (b) CONFORMING AMENDMENTS.— 

18 (1) Section 9503 of such Code is amended by 

19 striking subsection (d). 

20 (2)(A) Paragraph (4) of section 9503(e) of such 

21 Code is amended to read as follows: 

22 ‘‘(4) REDUCTION IN RATE OF TRANSFER BASED

23 ON REDUCTION IN STATE TAX RATES.— 

24 ‘‘(A) IN GENERAL.—There shall be sub25 stituted for each amount in paragraph (2) an 


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1 amount which bears the same ratio to such 

2 amount as the aggregate reduced tax rate bears 

3 to the aggregate unreduced tax rate. 

4 ‘‘(B) AGGREGATE REDUCED TAX RATE.— 

5 For purposes of subparagraph (A), the term 

6 ‘aggregate reduced tax rate’ means, with re7 spect to any amount for any calendar year, the 

8 amount of tax that the Secretary estimates will 

9 be imposed with respect to the liquid or fuel to 

10 which such amount relates for such year after 

11 application of section 4106. 

12 ‘‘(C) AGGREGATE UNREDUCED TAX

13 RATE.—For purposes of subparagraph (A), the 

14 term ‘aggregate unreduced tax rate’ means, 

15 with respect to any amount for any calendar 

16 year, the amount of tax that the Secretary esti17 mates would have been imposed with respect to 

18 the liquid or fuel to which such amount relates 

19 for such year if section 4106 did not apply for 

20 such year.’’. 

21 (B) Subparagraph (A) of section 9503(e)(2) of 

22 such Code is amended by striking ‘‘sentence’’ and 

23 inserting ‘‘subsection’’. 

24 (3) The table for section for subpart B of part 

25 III of subchapter A of chapter 32 of such Code is 


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1 amended by adding at the end the following new 

2 item: 

‘‘Sec. 4106. Reduction in rates of tax based on increase in State tax rate.’’. 

3 (c) EFFECTIVE DATE.—The amendment made by 

4 this section shall apply to liquid or fuel removed, entered, 

5 sold, or used after the date of the enactment of this Act. 

Æ 


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