Congress Considers Legislation Limiting State and Local Taxes
Governing reports that no less than seven bills to preempt state and local taxes are being considered in Congress. The bills would restrict taxation of everything from out-of-state corporations’ income to temporary employees’ wages to the sale of online music, mobile phone service, and satellite television.
- H.R. 1860 – Digital Goods and Services Tax Fairness Act – limits taxation of digital product (i.e. online music) sales to the jurisdiction in which the retail sale occurs.
Out-of-State Corporate Income:
- H.R. 1439 – Business Activity Tax Simplification Act – prohibits taxing the income of corporations that do not have a “physical presence” in the taxing jurisdiction. See a recent CSG blog for more detail on this and related topics.
Mobile Phone Service:
- H.R. 1002 – Wireless Tax Fairness Act – prohibits imposing new taxes (i.e. taxes imposed after the enactment of the bill) on mobile phone service, providers, or property that are 1) not generally imposed on other types of services or property, or 2) generally imposed at a lower rate.
Temporary Workers’ Wages:
- H.R. 1864 – Mobile Workforce State Income Simplification Act – limits taxation of multi-state employee wages to 1) the state in which the employee lives, and 2) states in which the employee works for more than 30 days.
Cable and Satellite Television:
- H.R. 1804 – State Video Fairness Act – prohibits discriminatory taxation of multichannel programming distribution services, such as cable and satellite television.
- H.R. 2469 – End Discriminatory State Taxes for Automobile Renters Act – prohibits discriminatory taxation of motor vehicle rentals, motor vehicle rental businesses, or motor vehicle rental property.
- S. 135 – Permanent Internet Tax Freedom Act of 2011– permanently bans state and local taxation of internet access.
The Fiscal Impact
To date, the Congressional Budget Office (CBO) has only estimated the revenue implications for one of the bills. According to CBO, the Wireless Tax Fairness Act would not entail any revenue losses for state and local governments over the next five years, since in its judgment, no government intends to impose new wireless taxes over that time. To read the cost estimate, click here.
CBO estimated a 2005 version of the Business Activity Tax Simplification Act would cost state and local governments about $3 billion dollars over an ensuing five year period. To read the 2005 estimate, click here.