I
103D CONGRESS
2D SESSION
H. R. 4233
To amend the Internal Revenue Code of 1986 to allow a taxpayer to elect
to deduct either State and local income taxes or State and local sales taxes.
IN THE HOUSE OF REPRESENTATIVES
APRIL 14, 1994
Mr. SUNDQUIST 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
taxpayer to elect to deduct either State and local income
taxes or 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. ELECTION TO DEDUCT STATE AND LOCAL IN-
COME TAX OR STATE AND LOCAL SALES TAX.
(a) IN GENERAL.—Section 164(a) of the Internal
Revenue Code of 1986 (relating to deduction for taxes)
is amended by adding after paragraph (5) the following
new paragraph:
‘‘(6) At the election of the taxpayer, either—
‘‘(A) State and local income taxes, or
‘‘(B) State and local general sales taxes.’’.
(b) GENERAL SALES TAXES.—Section 164(b) of such
Code (relating to definitions and special rules) is amended
by adding at the end the following new paragraph:
‘‘(5) GENERAL SALES TAXES.—
‘‘(A) IN
GENERAL.—The term ‘general
sales tax’ means a tax imposed at one rate in
respect of the sale at retail of a broad range of
classes of items.
‘‘(B) 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 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.
‘‘(C) 
ITEMS
TAXED
AT
DIFFERENT
RATES.—Except in the case of a lower rate of
tax applicable in respect of an item described in
subparagraph (B), no deduction shall be al-
lowed under this section for any general sales
tax imposed in respect of an item at a rate
other than the general rate of tax.
‘‘(D) 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 proceeding sentence, the term ‘compensat-
ing 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 subsection (a)(6) in respect of
items sold at retail in the taxing jurisdic-
tion which are similar to such item.
‘‘(E) 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.
‘‘(F) 
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.’’.
(c) CONFORMING AMENDMENT.—Paragraph (3) of
section 164(a) of such Code is amended by striking out
‘‘State and local, and foreign,’’ and inserting in lieu there-
of ‘‘Foreign’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1992.
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