H.R. 118 — Introduced in House

I 114th CONGRESS 1st Session H. R. 118 IN THE HOUSE OF REPRESENTATIVES January 6, 2015 Mr. Garrett introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to reduce the Federal tax on fuels by the amount of any increase in the rate of tax on such fuel by the States. 1. Short title; etc (a) Short title This Act may be cited as the Surface Transportation and Taxation Equity Act or as the STATE Act. (b) Purposes The purposes of this Act are to— (1) return primary transportation program responsibility and taxing authority to the States, (2) free States’ transportation dollars from Federal micromanagement, earmarking, and budgetary pressures, (3) enable decisions regarding which infrastructure projects will be built, how they will be financed, and how they will be regulated to be made by persons best able to make those decisions, (4) eliminate the current system in which a Federal gasoline tax is sent to Washington and through a cumbersome Department of Transportation bureaucracy, (5) prohibit the Federal Government from forcing unwanted mandates on States by threatening to withhold transportation money, and (6) achieve measurable congestion mitigation and infrastructure preservation and safety in a cost effective way subject to available resources. 2. Federal tax on fuels decreased by amount of increase in State tax on fuel (a) In general Subpart B of part III of subchapter A of chapter 32 of the Internal Revenue Code of 1986 (relating to special provisions applicable to fuels tax) is amended by adding at the end the following new section: 4106. Reduction in rates of tax based on increase in State tax rate (a) In general Under regulations prescribed by the Secretary, the rate of tax imposed under section 4081 with respect to any fuel and the rate of tax imposed under section 4041 with respect to any liquid shall be decreased, but not below 2 cents per gallon, by the applicable State tax rate increase with respect to such fuel or liquid. (b) Applicable State tax rate increase For purposes of this section, the term applicable State tax rate increase means, with respect to any fuel or liquid, the excess, as periodically determined under tables prescribed by the Secretary, of— (1) the rate of tax imposed by the applicable State on the sale or use of such fuel or liquid, over (2) the rate of tax imposed by the applicable State on the sale or use of such fuel or liquid as of the date of the introduction of the STATE Act. Any increase in the rate of tax imposed by any applicable State on the sale or use of any fuel or liquid shall be taken into account under this subsection only if State law provides that such increase is to be taken into account under this subsection. (c) Applicable State For purposes of this section, the term applicable State means the State which is determined under regulations prescribed by the Secretary as— (1) in the case of a liquid to which section 4041 applies, the State in which such liquid is sold or used, or (2) in the case of a fuel to which section 4081 applies, the State in which such fuel is most likely to be sold or used. (d) Requirement To maintain interstate highway system Subsection (a) shall not apply with respect to any fuel or liquid if the applicable State with respect to such fuel or liquid has not entered into an agreement with the Secretary of Transportation under which such State has agreed to provide for the proper maintenance of that portion of the interstate highway system which is within such State. . (b) Conforming amendments (1) Section 9503 of such Code is amended by striking subsection (d). (2) (A) Paragraph (4) of section 9503(e) of such Code is amended to read as follows: (4) Reduction in rate of transfer based on reduction in State tax rates (A) In general There shall be substituted for each amount in paragraph (2) an amount which bears the same ratio to such amount as the aggregate reduced tax rate bears to the aggregate unreduced tax rate. (B) Aggregate reduced tax rate For purposes of subparagraph (A), the term aggregate reduced tax rate means, with respect to any amount for any calendar year, the amount of tax that the Secretary estimates will be imposed with respect to the liquid or fuel to which such amount relates for such year after application of section 4106. (C) Aggregate unreduced tax rate For purposes of subparagraph (A), the term aggregate unreduced tax rate means, with respect to any amount for any calendar year, the amount of tax that the Secretary estimates would have been imposed with respect to the liquid or fuel to which such amount relates for such year if section 4106 did not apply for such year. . (B) Subparagraph (A) of section 9503(e)(2) of such Code is amended by striking sentence and inserting subsection. (3) The table for section for subpart B of part III of subchapter A of chapter 32 of such Code is amended by adding at the end the following new item: Sec. 4106. Reduction in rates of tax based on increase in State tax rate. . (c) Effective date The amendment made by this section shall apply to liquid or fuel removed, entered, sold, or used after the date of the enactment of this Act.