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. 

The Bills

Digital Goods:

Out-of-State Corporate Income:

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:

Cable and Satellite Television:

Rental Cars:

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.