I 
109TH CONGRESS 
1ST SESSION H. R. 2471 
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 HOUSE OF REPRESENTATIVES 
MAY 18, 2005 
Mr. TIBERI (for himself, Mr. CHANDLER, Mr. LEWIS of Kentucky, Mr. 
WHITFIELD, Mr. DAVIS of Kentucky, Mr. ROGERS of Kentucky, Mr. 
JENKINS, Mr. CAMP, Mr. MCHUGH, Mr. NEY, Mr. WALSH, Mr. TURNER, 
Mrs. NORTHUP, Mr. BOYD, Mr. DAVIS of Tennessee, Mr. COOPER, Mr. 
MCINTYRE, Mr. TAYLOR of Mississippi, Mr. CASE, Ms. HERSETH, Mr. 
HOLDEN, Mr. MELANCON, Mrs. TAUSCHER, Mr. ROSS, Mr. TANNER, Mr. 
BOSWELL, Ms. HARMAN, Mr. BISHOP of Georgia, Mr. CARDOZA, Mr. 
SALAZAR, and Mr. DUNCAN) introduced the following bill; which was re-
ferred to the Committee on the Judiciary 
A BILL 
To authorize the States (and subdivisions thereof), the Dis-
trict of Columbia, territories, and possessions of the 
United States to provide certain tax incentives to any 
person for economic development purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Economic Development 
Act of 2005’’.
SEC. 2. AUTHORIZATION. 
Congress hereby exercises its power under Article I, 
Section 8, Clause 3 of the United States Constitution to 
regulate commerce among the several States by author-
izing any State to provide to any person for economic de-
velopment purposes tax incentives that otherwise would be 
the cause or source of discrimination against interstate 
commerce under the Commerce Clause of the United 
States Constitution, except as otherwise provided by law. 
SEC. 3. LIMITATIONS. 
(a) TAX INCENTIVES NOT SUBJECT TO PROTECTION 
UNDER THIS ACT.—Section 2 shall not apply to any State 
tax incentive which— 
(1) is dependent upon State or country of incor-
poration, commercial domicile, or residence of an in-
dividual; 
(2) requires the recipient of the tax incentive to 
acquire, lease, license, use, or provide services to 
property produced, manufactured, generated, assem-
bled, developed, fabricated, or created in the State; 
(3) is reduced or eliminated as a direct result 
of an increase in out-of-State activity by the recipi-
ent of the tax incentive; 
(4) is reduced or eliminated as a result of an 
increase in out-of-State activity by a person other 
than the recipient of the tax incentive or as a result
of such other person not having a taxable presence 
in the State; 
(5) results in loss of a compensating tax sys-
tem, because the tax on interstate commerce exceeds 
the tax on intrastate commerce; 
(6) requires that other taxing jurisdictions offer 
reciprocal tax benefits; or 
(7) requires that a tax incentive earned with re-
spect to one tax can only be used to reduce a tax 
burden for or provide a tax benefit against any other 
tax that is not imposed on apportioned interstate ac-
tivities. 
(b) NO INFERENCE.—Nothing in this section shall be 
construed to create any inference with respect to the valid-
ity or invalidity under the Commerce Clause of the United 
States Constitution of any tax incentive described in this 
section. 
SEC. 4. DEFINITIONS; RULE OF CONSTRUCTION. 
(a) DEFINITIONS.—For purposes of this Act— 
(1) COMPENSATING
TAX
SYSTEM.—The term 
‘‘compensating tax system’’ means complementary 
taxes imposed on both interstate and intrastate com-
merce where the tax on interstate commerce does 
not exceed the tax on intrastate commerce and the 
taxes are imposed on substantially equivalent events.
(2) ECONOMIC DEVELOPMENT PURPOSES.—The 
term ‘‘economic development purposes’’ means all le-
gally permitted activities for attracting, retaining, or 
expanding business activity, jobs, or investment in a 
State. 
(3) IMPOSED
ON
APPORTIONED
INTERSTATE 
ACTIVITIES.—The term ‘‘imposed on apportioned 
interstate activities’’ means, with respect to a tax, a 
tax levied on values that can arise out of interstate 
or foreign transactions or operations, including taxes 
on income, sales, use, gross receipts, net worth, and 
value added taxable bases. Such term shall not in-
clude taxes levied on property, transactions, or oper-
ations that are taxable only if they exist or occur ex-
clusively inside the State, including any real prop-
erty and severance taxes. 
(4) PERSON.—The term ‘‘person’’ means any 
individual, corporation, partnership, limited liability 
company, association, or other organization that en-
gages in any for profit or not-for-profit activities 
within a State . 
(5) PROPERTY.—The term ‘‘property’’ means 
all forms of real, tangible, and intangible property. 
(6) STATE.—The term ‘‘State’’ means each of 
the several States (or subdivision thereof), the Dis-
trict of Columbia, and any territory or possession of 
the United States. 
(7) STATE TAX.—The term ‘‘State tax’’ means 
all taxes or fees imposed by a State. 
(8) TAX
BENEFIT.—The term ‘‘tax benefit’’ 
means all permanent and temporary tax savings, in-
cluding applicable carrybacks and carryforwards, re-
gardless of the taxable period in which the benefit 
is claimed, received, recognized, realized, or earned. 
(9) TAX INCENTIVE.—The term ‘‘tax incentive’’ 
means any provision that reduces a State tax burden 
or provides a tax benefit as a result of any activity 
by a person that is enumerated or recognized by a 
State tax jurisdiction as a qualified activity for eco-
nomic development purposes. 
(b) RULE OF CONSTRUCTION.—It is the sense of 
Congress that the authorization provided in section 2 
should be construed broadly and the limitations in section 
3 should be construed narrowly. 
SEC. 5. SEVERABILITY. 
If any provision of this Act or the application of any 
provision of this Act to any person or circumstance is held 
to be unconstitutional, the remainder of this Act and the 
application of the provisions of this Act to any person or 
circumstance shall not be affected by the holding.
SEC. 6. EFFECTIVE DATE. 
This Act shall apply to any State tax incentive en-
acted before, on, or after the date of the enactment of 
this Act. 
Æ