Senate Floor Speech
Senator Kay Bailey Hutchison
March 24, 2004 -- Page: S3061

THE JUMPSTART OUR BUSINESS STRENGTH (JOBS) ACT

MRS. HUTCHISON. Mr. President, we have a huge inequity in the Tax Code today. There are seven States that have a sales tax but no income tax. The States that don't have an income tax generally have a higher sales tax. That is the case with my State of Texas and six other States.

Fifty-five million taxpayers who have only sales taxes for their State and a local major tax revenue base do not get to deduct from their Federal income taxes what they pay in local and State sales taxes. On the other hand, income tax State taxpayers do get that deduction. So if you have a high sales tax and that is the basis of your revenue for your State and local government, you are paying taxes on your taxes. This is not equitable. Fifty-five million taxpayers have this inequity.

My amendment would treat everyone the same. It would give you the opportunity to either deduct sales taxes or income taxes on your Federal income tax return. This discrepancy has a huge impact on my State of Texas. According to the Texas Comptroller, if taxpayers could deduct their sales taxes, more than $700 million would be kept in Texans' pocketbooks. This could lead to 16,000 new jobs and add $900 million in economic activity.

Many States are facing financial crises. Our State certainly is, and many other States are. What we want is not an advantage. What we want is equity.

I realize this bill is very important to end punitive tariffs the European Union has begun to impose on U.S. products. I do not want to impede this bill. It is so important for American manufacturers not to have this punitive tariff on our products going into European commerce. I am willing to work with the managers of the bill. I am willing to withdraw the amendment. But I am serving notice that we have had this inequity since 1986. Since 1986, seven States have had this discrimination. When there was a reform of taxation in 1986, they took away the deduction for sales taxes, and no one stood up and said there is an inequity in that there are seven States that have no income taxes and we are leaving the income tax deduction, but we are discriminating against States such as Florida, Tennessee, Texas, Washington, and Nevada.

We need to correct this inequity. I ask that the chairman withdraw the amendment at this time. I certainly support the underlying bill, but I am serving notice this inequity must be corrected soon.