I
106TH CONGRESS
1ST SESSION
H. R. 1433
To amend the Internal Revenue Code of 1986 to allow a deduction for
State and local sales taxes in lieu of State and local income taxes.
IN THE HOUSE OF REPRESENTATIVES
APRIL 15, 1999
Mr. BAIRD 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
deduction for State and local sales taxes in lieu of State
and local income taxes.
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 ‘‘Tax Deduction Fair-
ness Act of 1999’’.
SEC. 2. DEDUCTION OF STATE AND LOCAL GENERAL SALES
TAXES IN LIEU OF STATE AND LOCAL IN-
COME TAXES.
(a) IN GENERAL.—Subsection (b) of section 164 of
the Internal Revenue Code of 1986 (relating to definitions
‘‘(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 re-
spect of a broad range of classes of items,
and
‘‘(ii) the fact that the rate of tax ap-
plicable in respect of some or all of such
items is lower than the general rate of tax
shall not be taken into account in deter-
mining whether the tax is imposed at one
rate.
‘‘(D) 
ITEMS
TAXED
AT
DIFFERENT
RATES.—Except in the case of a lower rate of
tax applicable in respect of an item described in
subparagraph (C), no deduction shall be allowed
under this paragraph for any general sales tax
imposed in respect of an item at a rate other
than the general rate of tax.
‘‘(E) COMPENSATING USE TAXES.—A com-
pensating use tax in respect of an item shall be
treated as a general sales tax. For purposes of
the preceding 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 allow-
able under this paragraph in respect of
items sold at retail in the taxing jurisdic-
tion which are similar to such item.
‘‘(F) SPECIAL
RULE
FOR
MOTOR
VEHI-
CLES.—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.
‘‘(G) 
SEPARATELY
STATED
GENERAL
SALES TAXES.—If the amount of any general
sales tax is separately stated, then, to the ex-
tent 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.
‘‘(H) AMOUNT OF DEDUCTION TO BE DE-
TERMINED UNDER TABLES.—
‘‘(i) IN
GENERAL.—The amount of
the deduction allowed by this paragraph
shall be determined under tables prescribed
by the Secretary.
‘‘(ii) REQUIREMENTS FOR TABLES.—
The tables prescribed under clause (i) shall
reflect the provisions of this paragraph and
shall be based on the average consumption
by taxpayers on a State-by-State basis, as
determined by the Secretary, taking into
account filing status, number of depend-
ents, adjusted gross income, and rates of
State and local general sales taxation.’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
the date of the enactment of this Act.
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