[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 1666 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                S. 1666

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 SENATE OF THE UNITED STATES

            November 17 (legislative day, November 2), 1993

Mr. Gorton (for himself, Mr. Stevens, Mr. Mack, Mr. Pressler, and Mrs. 
  Hutchison) introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 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 Representatives of the 
United States of America in Congress assembled,

SECTION 1. ELECTION TO DEDUCT STATE AND LOCAL INCOME 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 supplies, 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 respect of a broad 
                        range of classes of items, and
                            ``(ii) the fact that the rate of tax 
                        applicable in respect of some or all of such 
                        items is lower than the general rate of tax 
                        shall not be taken into account in determining 
                        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 allowed 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 compensating 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 allowable under 
                        subsection (a)(6) in respect of items sold at 
                        retail in the taxing jurisdiction which are 
                        similar to such item.
                    ``(E) Special rule for motor vehicles.--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 extent 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 thereof ``Foreign''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1992.

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