[Congressional Record Volume 149, Number 2 (Wednesday, January 8, 2003)]
[Extensions of Remarks]
[Page E59]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STOP DISCRIMINATION AGAINST SEVEN STATES ACT OF 2003

                                 ______
                                 

                            HON. JIM COOPER

                              of tennessee

                    in the house of representatives

                       Wednesday, January 8, 2003

  Mr. COOPER. Mr. Speaker, most Americans take for granted that federal 
laws apply to every American equally, regardless of what state we live 
in. Well, you may be surprised to learn that taxpayers in seven states 
are discriminated against by the Internal Revenue Code, and have been 
since 1986. This means that the 51 million people who live in the 
states of Texas, Florida, Tennessee, Washington, New Hampshire, Alaska, 
and Wyoming are treated differently, and punitively, by the federal 
government, due to no fault of their own, and for no good reason of 
public policy. This injustice amounts to many billions of dollars in 
higher taxes paid by residents of these states every year.
  How did this discrimination occur? Prior to 1986, federal tax law 
allowed taxpayers to deduct from their federal income tax any state 
taxes that they paid, whether for a state income tax or a state sales 
tax. This deduction allowed all Americans the ability to reduce their 
federal tax burden due to the accepted principle that (1) the federal 
government deferred to the chosen tax system of each state, and (2) to 
prevent double taxation of taxes paid to state governments.
  After 1986, in the tax reform act of that year, only state income 
taxes were deductible. Taxpayers in states with no income tax were 
suddenly allowed no deduction on the money they paid to their state 
governments. The 1986 tax reform legislation was a giant bill with many 
unintended consequences. There was no sound public policy reason for 
discriminating against states which have chosen to rely on a sales tax, 
yet this discrimination has persisted for 16 years.
  There are 43 states today which have a state income tax and seven 
states which have no income tax, but which in most cases use a state 
sales tax for their primary source of revenue. This means that 
taxpayers in 43 states get different and better treatment from the 
Internal Revenue Code than the residents of the other seven states: 
Texas, Florida, Tennessee, Washington, New Hampshire, Alaska, and 
Wyoming.
  I have introduced a bill today to remedy this situation. My original 
cosponsors are Bart Gordon, John Tanner, and Lincoln Davis. My 
legislation would allow taxpayers in states which rely on a sales tax 
to get the same deduction as residents of income tax states--no better 
and no worse.
  To allow the current injustice to continue means that federal law is 
forcing all states to adopt an income tax. This should never be federal 
policy. To deny 51 million Americans the benefits of a deduction that 
every other American enjoys is rank discrimination. And to deny this 
deduction is to effectively double-tax the hard-earned pay of residents 
of seven states.
  My colleague Brian Baird has been fighting this battle for years now, 
as has my predecessor, Bob Clement. There are 79 Members of Congress 
whose constituents are directly and adversely affected by this 
discrimination. We owe it to our seven states, and to the 51 million 
people we represent to restore basic fairness to our tax code.