[Congressional Record (Bound Edition), Volume 150 (2004), Part 13]
[Senate]
[Page 17940]
[From the U.S. Government Publishing Office, www.gpo.gov]




                               SALES TAX

  Mr. FRIST. Mr. President, this morning with my opening statement, I 
noted that most of the next 22 days on the floor of the Senate will 
focus on the safety and security of the American people. In addition, 
at the conference level, there are a number of other issues being 
discussed--like the FSC/ETI JOBS bills and the transportation bill for 
example. I want to speak to the FSC/ETI JOBS bill very briefly.
  There is a provision in that bill that is very important to families 
and workers all across Tennessee. It has to do with the deductibility 
of sales tax. Senator Hutchison, Congressman Brady and Congresswoman 
Blackburn have all worked tirelessly on this issue. The majority leader 
in the House, Congressman DeLay, has as well. I thank them all for 
their continued leadership. And I appreciate all they have done to see 
that State sales tax deductibility was included in the House version of 
the JOBS bill.
  I have heard from countless Tennesseans about their adamant desire to 
be able to deduct sales tax from their Federal income tax. Again and 
again it comes back to a matter of equity and fairness. Mr. Henry 
Branch from Goodlettsville, TN wrote to me, Senator Alexander and 
Congressman Jim Cooper with his one request.
  His words:

       I hold that sales tax deductibility should be very 
     seriously considered since continuation of the current status 
     penalizes citizens of all states not having a broad-based 
     income tax. I simply ask that all of you work together to 
     remove the inequity.

  A matter of equity.
  Mr. James Griggs from Nashville writes:

       I cannot conceive of a single reason why states that use a 
     different type of tax system should be punished for it. It 
     seems to me to be a clever ploy to force states into using 
     income taxes instead, a position I strongly stand against. In 
     my opinion, citizens should be able to deduct any kind of tax 
     they pay.

  A matter of fairness.
  Mr. Robert McCulloch from Knoxville writes:

       Having just completed my Federal income tax return for 
     2003, I am once again reminded how unfairly treated are the 
     good citizens of Tennessee.

  As all of these fine Tennesseans point out, enactment of this 
provision will restore a measure of fairness to the Tax Code that 
existed up until 1986, but was lost at that point in time. The current 
Federal Tax Code unfairly encourages States to impose an income tax 
because part of that cost is borne by the national Treasury. This is 
wrong. The Federal Government should be neutral on how States decide to 
raise revenue. States should be able to decide for themselves without 
the intrusion of Federal tax policy. We must restore equity and 
fairness to the system.
  It also is consistent with the principles of fairness to all 
taxpayers. Deductibility for State sales taxes was eliminated in 1986, 
but deductibility for State income taxes was retained. It is long past 
time to fix this fundamentally unfair and counterproductive result.
  If someone at any time wants to debate whether the Federal Tax Code 
should allow a deduction for any State and local taxes, whether it is a 
sales tax or an income tax, be that as it may, that debate could take 
place. But there is no principled reason why sales taxes should be 
denied a deduction that is applicable to income taxes.
  Equally important, including the deductibility of sales tax will also 
provide a direct boost to consumers and to our economy. For example, in 
Tennessee alone, almost one-quarter of all taxpayers would receive an 
average benefit of $470 each. Citizens in States such as Texas, South 
Dakota and Tennessee could use that money to buy school supplies, to 
invest in their businesses, to make a downpayment for a car, to pay off 
some of those credit card bills.
  This provision takes relatively little from the Federal Treasury but 
monumentally changes the lives and livelihoods of the 54 million 
Americans living in States that have chosen not to impose an income 
tax.

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