H.R. 4520, American Jobs Creation Act of 2004

H.R. 4520, American Jobs Creation Act of 2004

Yesterday I cast a vote in favor of H.R. 4520, the American Jobs Creation Act of 2004, which passed the House overwhelmingly by a vote of 251-178. The bill included language from Congressman Kevin Brady's Sales Tax Deductibility measure. Once it is signed into law, this bill will restore the ability of Texans to deduct state and local sales taxes from their federal income tax returns. Currently, people that pay state income taxes are allowed to deduct those taxes from their federal income taxes, and this bill will help level the playing field for Texans.

Congressman Brady has worked for three years to pass this legislation and deserves our thanks and congratulations. Both Congressman Brady and Majority Leader Tom DeLay made extraordinary efforts to include the sales tax deduction in this bill. Restoration of the sales tax deduction would only last two years under this bill, but I am optimistic Congress will extend the legislation permanently once the deductions are restored. It would be very difficult for Congress to, in effect, raise taxes on Americans by ending the deduction in two years. I will continue to work with Majority Leader DeLay and Congressman Brady to keep this deduction in place.

In addition to the new tax relief for Texans, H.R. 4520 also lowers tax rates for domestic manufacturers from 35 percent to 32 percent, which was necessary to end escalating European Union duties against exports from American manufacturers for using the Foreign Sales Corporation/Extraterritorial Income (FSC/ETI) export tax regime. This regime was ruled an illegal trade subsidy by the World Trade Organization. The Senate companion bill, S. 1637, the Jumpstart Our Business Strength Act, passed on May 11, 2004, and the bills are ready to move to conference.

I am a co-sponsor of H.R. 4520, but my long-term goal is to abolish the Internal Revenue Service (IRS) and the income tax and replace it with a national retail sales tax, a consumption based tax, collected by the states at the time of the sale. Abolishing the income tax by replacing it with a national sales tax would allow all of us to keep our entire paycheck and only pay taxes when we buy goods and services. I am a co-author of H.R. 25, Congressman John Linder's (R-Georgia) Fair Tax legislation. Congressman Linder's bill uses a rebate system for low income families to pay for the essentials of life, but my personal preference is that the Fair Tax bill exempts food, medicine, and capitol investments such as real estate for the sales tax. I will work hard to get the bill out of the Ways and Means Committee and onto the House floor for a vote.

I believe a law abiding American citizen's right is to be left alone. The government should not know how much money we earn, and the national sales tax, or the freedom tax as I call it, is the best way to guarantee that all Americans have financial privacy to protect our pocketbooks from government intrusion. Yesterday with the passing of H.R. 4520, Congress made good changes for the taxpayer by reinstating past deductions, extending current deductions, and easing the tax burden on businesses. But until we can establish a consumption tax, the American taxpayer will never experience true relief.

For more information about the consumption tax, please visit Americans for Tax Reform.

Information about H.R. 4520, The American Jobs Creation Act of 2004, can be found on the Ways and Means website and the Republican Study Committee website.