I
107TH CONGRESS
2D SESSION
H. R. 4487
To amend the Internal Revenue Code of 1986 to allow residents of States
with no income tax a deduction for State and local sales taxes.
IN THE HOUSE OF REPRESENTATIVES
APRIL 18, 2002
Mr. BRYANT (for himself and Mr. HILLEARY) 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 resi-
dents of States with no income tax a deduction for
State and local sales 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 ‘‘Sales Tax Fairness
Act of 2002’’.
SEC. 2. DEDUCTION OF STATE AND LOCAL GENERAL SALES
TAXES FOR RESIDENTS OF STATES WITH NO
INCOME TAX.
(a) IN GENERAL.—Subsection (b) of section 164 of
the Internal Revenue Code of 1986 (relating to definitions
and special rules) is amended by adding at the end the
following:
‘‘(5) GENERAL SALES TAXES.—For purposes of
this section—
‘‘(A) DEDUCTION OF STATE AND LOCAL
SALES TAXES BY RESIDENTS OF STATES IMPOS-
ING NO INCOME TAX.—In the case of an indi-
vidual who is a resident for more than half of
the taxable year of a State which imposes no in-
come tax on income earned within such State
by residents of such State and who elects the
application of this paragraph, subsection (a)
shall be applied—
‘‘(i) without regard to the reference to
State and local income taxes,
‘‘(ii) as if State and local general sales
taxes were referred to in a paragraph
thereof, and
‘‘(iii) without regard to the last sen-
tence.
‘‘(B) DEFINITION
OF
GENERAL
SALES
TAX.—The term ‘general sales tax’ means a tax
imposed at one rate with respect to the sale at
retail of a broad range of classes of items.
‘‘(C) SPECIAL RULES FOR FOOD, ETC.—In
the case of items of food, clothing, medical sup-
plies, and motor vehicles—
‘‘(i) the fact that the tax does not
apply with respect to some or all of such
items shall not be taken into account in
determining whether the tax applies with
respect to a broad range of classes of
items, and
‘‘(ii) the fact that the rate of tax ap-
plicable with respect to 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 with respect to an item described
in subparagraph (C), no deduction shall be al-
lowed under this paragraph for any general
sales tax imposed with respect to an item at a
rate other than the general rate of tax.
‘‘(E) COMPENSATING USE TAXES.—A com-
pensating use tax with respect to an item shall
be treated as a general sales tax. For purposes
of the preceding sentence, the term ‘compen-
sating use tax’ means, with respect to 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 with respect to
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 (other than in connection with the
consumer’s trade or business) to the 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 under this para-
graph shall be determined under tables
prescribed by the Secretary.
‘‘(ii) REQUIREMENTS FOR TABLES.—
The tables prescribed under clause (i)—
‘‘(I) shall reflect the provisions of
this paragraph,
‘‘(II) shall be based on the aver-
age consumption by taxpayers on a
State-by-State basis, as determined by
the Secretary, taking into account fil-
ing status, number of dependents, ad-
justed gross income, and rates of
State and local general sales taxation,
and
‘‘(III) need only be determined
with respect to adjusted gross incomes
up to the applicable amount (as deter-
mined under section 68(b)).’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
the date of the enactment of this Act.
Æ