[Congressional Record Volume 151, Number 21 (Tuesday, March 1, 2005)]
[Senate]
[Pages S1872-S1873]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. CANTWELL:
  S. 479. A bill to amend title 4 of the United States Code to prohibit 
a State from imposing a discriminatory tax on income earned within such 
State by nonresidents of such State; to the Committee on Finance.
  Ms. CANTWELL. Mr. President, today I am introducing legislation to 
correct a tax injustice affecting my home State of Washington, and all 
States that do not have a State income tax. My bill, the Nonresident 
Income Tax Freedom Act, would prohibit States from imposing income 
taxes on individuals that are not residents of that State. I hear about 
this issue in the areas of my State that border Oregon and Idaho, both 
States that have income taxes. In fact, wherever I go in Vancouver and 
throughout Clark County, I hear time and again from constituents about 
the unfairness of living in Washington State--a State that does not 
have an income tax--and working in Oregon--a State that does have an 
income tax and being taxed on their income earned in Oregon.
  According to the Oregon Department of Revenue, in 2002, there were 
51,991 Clark County residents working in Oregon. Taxed on their income, 
these nearly 52,000 individuals remitted $104 million to Oregon that 
year.
  Representing all of Washington State in Congress, it is not lost on 
me that an additional 30,181 Washington State residents outside of 
Clark County were also employed in Oregon in 2002, and these 30,000 
paid the State of Oregon $49.8 million.
  Furthermore, there are Washington State residents working in Idaho. 
In 2002, 19,467 of them owed the State of Idaho $18.9 million in income 
taxes.
  While I would like to hope that most Washingtonians could find 
employment in Washington State, and I am grateful for the job 
opportunities presented to Washingtonians in Oregon, I find it 
antithetical to notions of lifting up the economy of Washington State 
to have the incomes of Washington State residents taxed in Oregon.
  We have historical roots in this country related to the notion of no 
taxation without representation. Washington residents being taxed in 
Oregon is contrary to this whole premise--a premise upon which American 
independence rested over 200 years ago.
  Good tax policy rests on the notion that individual's contribution to 
the

[[Page S1873]]

government through taxes brings benefits to those individuals--good 
schools, navigable roads, safe communities, clean water, and other 
services.
  With incomes taxed in Oregon, Washington residents receive very 
little benefit for the contributions made to the State of Oregon. 
Granted, Oregon maintains the infrastructure used by Washingtonians to 
get to work; but there are a number of benefits that Washington 
residents never realize from the taxes they pay. For example, 
Washington State residents employed in Oregon and paying Oregon income 
taxes do not receive in-State tuition rates for college.
  In addition, Washington State residents employed in Oregon and paying 
Oregon income taxes do not receive the benefit of paying less for 
fishing licenses. Examples of what this can mean: for 2005, an angling 
license for Oregonians is $24.75 for the year; for a Washingtonian who 
pays income taxes in Oregon, his/her angling license is $61.50--a 248-
percent increase. The discrepancy in Idaho is even greater. For 2005, a 
combined hunting/fishing license for an Idaho resident is $30.50 and 
for a Washingtonian who is paying Idaho income taxes would be charged 
$181.50 for the same license--a 595-percent increase.
  And first and foremost, Washington residents employed in Oregon and 
paying income taxes are not afforded voting rights in Oregon, thereby 
being taxed without representation.
  The power for Congress to enact legislation to prohibit one State 
from assessing taxes on nonresidents working within that State exists 
in the Commerce Clause of the U.S. Constitution, Article I, Section 8, 
Clause 3. And Congress has exercised this authority in the past.
  The Soldiers' and Sailors' Civil Relief Act of 1940 prohibits States 
from taxing the compensation of nonresident military personnel who are 
stationed in that State.
  In July of 1977, Congress passed, and President Carter signed, 
legislation prohibiting the States of Virginia and Maryland, or the 
District of Columbia, from imposing an income tax against Members of 
Congress who maintain homes in those jurisdictions.
  Additionally, with the Amtrak Reauthorization and Improvement Act of 
1990, Congress granted tax immunity to employees of interstate railway, 
aviation, and motor carriers from paying State income taxes to any 
State other than an employee's State of residence.
  It is time for Congress, once again, to utilize its authority under 
the Commerce Clause to prohibit the imposition of income taxes by 
States on nonresidents. It is my view that interstate trade in labor is 
important commerce that deserves to be treated fairly.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 479

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Nonresident Income Tax 
     Freedom Act of 2005''.

     SEC. 2. PROHIBITION ON IMPOSITION OF INCOME TAXES BY STATES 
                   ON NONRESIDENTS.

       (a) In General.--Chapter 4 of title 4, United States Code, 
     is amended by adding at the end the following new section:

     ``Sec. 127. Prohibition on imposition of income taxes by 
       states on nonresidents

       ``Except to the extent otherwise provided in any voluntary 
     compact between or among States, a State or political 
     subdivision thereof may not impose a tax on income earned 
     within such State or political subdivision by nonresidents of 
     such State.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     4 of title 4, United States Code, is amended by adding at the 
     end the following new item:

``127. Prohibition on imposition of income taxes by States on 
              nonresidents.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of 
     enactment of this Act.

           By Mr. CONRAD (for himself and Mr. Dorgan):
  S. 482. A bill to provide environmental assistance to non-Federal 
interests in the State of North Dakota; to the Committee on Environment 
and Public Works.
  Mr. CONRAD. Mr. President, I am introducing the Water Infrastructure 
Revitalization Act, which authorizes $60 million through the U.S. Army 
Corps of Engineers to assist communities in North Dakota with water 
supply and treatment projects.
  Imagine if you went to turn on your kitchen faucet one day and no 
water came out. This scenario became true for thousands in the 
communities of Fort Yates, Cannonball, and Porcupine just days before 
Thanksgiving in 2003. The loss of drinking water forced the closure of 
schools, the hospital and tribal offices for days. About 170 miles 
upstream, the community of Parshall faces similar water supply 
challenges as the water level on Lake Sakakawea continues to drop, 
leaving its intake high and dry. These and other communities in the 
State have faced significant expenditures in extending their intakes to 
ensure a continued supply of water. In addition, the city of Mandan 
faces the prospect of constructing a new horizontal well intake because 
changes in sediment load and flow as a result of the backwater effects 
of the Oahe Reservoir have caused significant siltation problems that 
restrict flow into the intake. These examples barely scratch the 
surface of the problems faced by many North Dakota communities in 
maintaining a safe, reliable water supply.
  Since 1999, the Corps of Engineers has been authorized to design and 
construct water-related infrastructure projects in several different 
States including Wisconsin, Minnesota, and Montana. The State of North 
Dakota confronts water infrastructure challenges that are just as 
difficult as those in these other States. In fact, many of these 
challenges are caused directly by the Corps of Engineers' operations of 
the Missouri River dams. As a result, it is only appropriate that the 
Corps be part of the solution to North Dakota's water needs.
  The Water Infrastructure Revitalization Act would provide important 
supplemental funding to assist North Dakota communities with water-
related infrastructure repairs. Under the Act, communities could use 
the funding for wastewater treatment, water supply facilities, 
environmental restoration and surface water resource protection. 
Projects would be cost shared, with 75 percent Federal funding and 25 
percent non-federal in most instances. However, the bill reduces the 
financial burden on local communities if necessary to ensure that water 
rates do not exceed the national affordability criteria developed by 
the Environmental Protection Agency.
  This bill is not intended to compete with or take away funds for the 
construction of rural water projects under the Dakota Water Resources 
Act. Instead, it is meant to provide important supplemental funding for 
communities that are not able to receive funding from the Dakota Water 
Resources Act. I am pleased that the North Dakota Rural Water Systems 
Association has recognized the need for additional water project 
funding and endorsed this bill. It is my hope that this authorization 
will be included as part of the Water Resources Development Act that 
will be considered this year.
                                 ______