Appendix XII-Continued

in obligations guaranteed as to both principal and interest by the United States. For such purpose such obligations may be acquired (A) on original issue at the issue price, or (B) by purchase of outstanding obligations at the market price. The purposes for which obligations of the United States may be issued under the Second Liberty Bond Act, as amended, are hereby extended to authorize the issuance at par of special obligations exclusively to the Trust Fund. Such special obligations shall bear interest at a rate equal to the average rate of interest, computed as to the end of the calendar month next preceding the date of such issue, borne by all marketable interest-bearing obligations of the United States then forming a part of the Public Debt; except that where such average rate is not a multiple of one-eighth of 1 percent, the rate of interest of such special obligations shall be the multiple of one-eighth of 1 percent next lower than such average rate. Such special obligations shall be issued only if the Secretary of the Treasury determines that the purchase of other interest-bearing obligations of the United States, or of obligations guaranteed as to both principal and interest by the United States on original issue or at the market price, is not in the public interest. Advances to the Trust Fund pursuant to subsection (d) shall not be invested."

(3) SALE OF OBLIGATIONS.-Any obligation acquired by the Trust Fund (except special obligations issued exclusively to the Trust Fund) may be sold by the Secretary of the Treasury at the market price, and such special obligations may be redeemed at par plus accrued interest. (4) INTEREST AND CERTAIN PROCEEDS.-The interest on, and the proceeds from the sale or redemption of, any obligations held in the Trust Fund shall be credited to and form a part of the Trust Fund.

(f) EXPENDITURES FROM TRUST FUND.—

(1) FEDERAL-AID HIGHWAY PROGRAM.-Amounts in the Trust Fund shall be available, as provided by appropriation Acts, for making expenditures after June 30, 1956, and before October 1, 1972, to meet those obligations of the United States heretofore or hereafter incurred under the Federal-Aid Road Act approved July 11, 1916, as amended and supplemented, which are attributable to Federal-aid highways (including those portions of general administrative expenses of the Bureau of Public Roads payable from such appropriations).10

(2) REPAYMENT OF ADVANCES FROM GENERAL FUND.-Advances made pursuant to subsection (d) shall be repaid, and interest on such advances shall be paid, to the general fund of the Treasury when the Secretary of the Treasury determines that moneys are available in the Trust Fund for such purposes. Such interest shall be at rates computed in the same manner as provided in subsection (e) (2) for special obligations and shall be compounded annually. (3) TRANSFERS FROM TRUST FUND FOR GASOLINE AND LUBRICATING OIL USED FOR CERTAIN OTHER PURPOSES.-The Secretary of the Treasury shall pay from time to time from the Trust Fund into the general fund of the Treasury amounts equivalent to the amounts paid before July 1, 1973, under sections 6420 (relating to amounts paid in respect of gasoline used on farms), 6421 (relating to amounts paid in respect of gasoline used for certain nonhighway purposes or by local transit systems), and 6424 (relating to amounts paid in respect of lubricating oil not used in highway motor vehicles) of the Internal Revenue Code of 1954 on the basis of claims filed for periods beginning after June 30, 1956, and ending before October 1, 1972. This paragraph shall not apply to amounts estimated by the Secretary of the Treasury as paid under section 6421 of such Code with respect to gasoline used after December 31, 1964, in motorboats." (4) 1972 FLOOR STOCKS REFUNDS.-The Secretary of the Treasury shall pay from time to time from the Trust Fund into the general fund of the Treasury amounts equivalent to the following percentage of the floor stocks refunds made before July 1, 1973, under section 6412(a) (2) of the Internal Revenue Code of 1954

(A) 40 percent of the refunds in respect of articles subject to the tax imposed by section 4061(a)(1) of such Code (trucks, buses, etc.);

(B) 100 percent of the refunds in respect of articles subject to tax under section 4071(a) (1) (3), or (4) of such Code (certain tires, tubes, and tread rubber); and

As amended by P.L. 86–346, Sept. 22, 1959, § 104(5), 73 Stat. 622, striking out "par" after “(A) on original issue at” and inserting in lieu thereof "the issue price".

10 As amended by P.L. 87-61, June 29, 1961, § 207(d) (1), 75 Stat. 128, changing "July 1, 1972" to "October 1, 1972".

11 As amended by P.L. 87-61, June 29, 1961, § 207(d) (2), 75 Stat. 128, which changed "July 1, 1972" to "October 1, 1972"; by P.L. 88-578, Sept. 3, 1964, § 202(b) (1), 78 Stat. 904, which added the last sentence; and by P.L. 89-44, June 21, 1965, § 210(c)(1)–(3), 79 Stat. 144-145, which amended the heading to read as set forth in the text above, struck out "and 6421" and inserted in lieu thereof ", 6421", and inserted the reference to section 6424 immediately after "transit systems)". Paragraph (3) of section 209 (f) originally read as follows (70 Stat. 400):

"(3) TRANSFERS FROM TRUST FUND FOR GASOLINE USED ON FARMS AND FOR CERTAIN OTHER PURPOSES.-The Secretary of the Treasury shall pay from time to time from the Trust Fund into the general fund of the Treasury amounts equivalent to the amounts paid before July 1, 1973, under sections 6420 (relating to amounts paid in respect of gasoline used on farms) and 6421 (relating to amounts paid in respect of gasoline used for certain nonhighway purposes or by local transit systems) of the Internal Revenue Code of 1954 on the basis of claims filed for periods beginning after June 30, 1956, and ending before July 1, 1972."

Appendix XII-Continued

(C) 80 percent of the refunds in respect of gasoline subject to tax under section 4081 of such Code (other than gasoline to be used in motorboats, as estimated by the Secretary of the Treasury).12

[(5) 1961 FLOOR STOCKS REFUNDS ON GASOLINE.-The Secretary of the Treasury shall pay, from time to time from the Trust Fund into the general fund of the Treasury amounts equivalent to the floor stocks refunds made before July 1, 1962, under section 6412(a) (3).] 13

13

(5) TRANSFERS FROM THE TRUST FUND FOR SPECIAL MOTOR FUELS AND GASOLINE USED IN MOTORBOATS.-The Secretary of the Treasury shall pay from time to time from the trust fund into the land and water conservation fund provided for in title I of the Land and Water Conservation Fund Act of 1965 amounts as determined by him in consultation with the Secretary of Commerce equivalent to the taxes received, on or after January 1, 1965, under section 4041 (b) of the Internal Revenue Code of 1954 with respect to special motor fuels used as fuels for the propulsion of motorboats and under section 4081 of such Code with respect to gasoline used as fuel in motorboats.14

(6) TRANSFERS FROM THE TRUST FUND FOR INCOME TAX CREDITS ALLOWED FOR CERTAIN USES OF GASOLINE AND LUBRICATING OIL.-The Secretary of the Treasury shall pay from time to time from the Trust Fund into the general fund of the Treasury amounts equivalent to the credits allowed under section 39 of the Internal Revenue Code of 1954 (relating to credit for certain uses of gasoline and lubricating oil) with respect to gasoline and lubricating oil used before October 1, 1972. Such amounts shall be transferred on the basis of estimates by the Secretary of the Treasury, and proper adjustments shall be made in amounts subsequently transferred to the extent prior estimates were in excess or less than the credits allowed 15 (g) ADJUSTMENTS OF APPORTIONMENTS.-The Secretary of the Treasury shall from time to time, after consultation with the Secretary of Commerce, estimate the amounts which will be available in the Highway Trust Fund (excluding repayable advances) to defray the expenditures which will be required to be made from such fund. In any case in which the Secretary of the Treasury determines that, after all other expenditures required to be made from the Highway Trust Fund have been defrayed, the amounts which will be available in such fund (excluding repayable advances) will be insufficient to defray the expenditures which will be required as a result of the apportionment to the States of the amounts authorized to be appropriated for any fiscal year for the construction, reconstruction, or improvement of the Interstate System, he shall so advise the Secretary of Commerce and shall further advise the Secretary of Commerce as to the amount which, after all other expenditures required to be made from such fund have been defrayed, will be available in such fund (excluding repayable advances) to defray the expenditures required as a result of apportionment to the States of Federal-aid highway funds for the Interstate System for such fiscal year. The Secretary of Commerce shall determine the percentage which such amount is of the amount authorized to be appropriated for such fiscal year for the construction, reconstruction, or improvement of the Interstate System and, notwithstanding any other provision of law, shall thereafter apportion to the States for such fiscal year for the construction, reconstruction, or improvement of the Interstate System, in lieu of the amount which but for the provisions of this subsection would be so apportioned, the amount obtained by multiplying the amount authorized to be appropriated for such fiscal year by such percentage. Whenever the Secretary of the Treasury determines that there will be available in the Highway Trust Fund (excluding repayable advances) amounts which, after all other expenditures required to be made from such fund have been defrayed, will be available to defray the expenditures required as a result of the apportionment of any Federal-aid highway funds for the Interstate System previously withheld from apportionment for any fiscal year, he shall so advise the Secretary of Commerce and the Secretary of Commerce shall apportion to the States such portion of the funds so withheld from apportionment as the Secretary of the Treasury has advised him may be so apportioned without causing expenditures from the Highway Trust Fund for the Interstate System to exceed amounts available in such fund (exlcuding repayable advances) to defray such expenditures. Any funds apportioned pursuant to the provisions of the preceding sentence shall remain available for expenditure until the close of the third fiscal year following that in which apportioned.

12 As amended by P.L. 86-342, Sept. 21, 1959, § 202(b) (2) (A), 73 Stat. 616, inserting "1972" before "FLOOR'' in the heading; by P.L. 87-61, June 29, 1961, § 207 (d) (3), 75 Stat. 128, amending subparagraph (B) to read as above and changing "66% percent" in subparagraph (C) to "80 percent''; and by P.L. 88-578, Sept. 3, 1964, § 202(b) (2), 78 Stat. 904, inserting after "such code" in subparagraph (C) the following: "(other than gasoline to be used in motorboats, as estimated by the Secretary of the Treasury)".

As originally enacted, subparagraphs (B) and (C) read as follows (70 Stat. 400):

"(B) 100 percent of the refunds in respect of articles subject to tax under section 4071 (a) (1) or (4) of such Code (tires of the type used on highway vehicles and tread rubber); and "(C) 66% percent of the refunds in respect of gasoline subject to tax under section 4081 of such Code."

13 Paragraph (5) was added to section 209 (f) by P.L. 86-342, Sept. 21, 1959, § 202(b)(2)(B) 73 Stat. 616. It was repealed by P.L. 87-61, June 29, 1961, § 207(d) (4), 75 Stat. 128.

14 As added by P.L. 88-578, Sept. 3, 1964, § 202(a), 78 Stat. 904.

15 As added by P.L. 89-44, June 21, 1965, § 809(e), 79 Stat. 168.

Appendix XII-Continued

SEC. 210. INVESTIGATION AND REPORT TO CONGRESS.

(a) PURPOSE.-The purpose of this section is to make available to the Congress information on the basis of which it may determine what taxes should be imposed by the United States, and in what amounts, in order to assure, insofar as practicable, an equitable distribution of the tax burden among the various classes of persons using the Federal-aid highways or otherwise deriving benefits from such highways.

(b) STUDY AND INVESTIGATION.-In order to carry out the purpose of this section, the Secretary of Commerce is hereby authorized and directed, in cooperation with other Federal officers and agencies (particularly the Interstate Commerce Commission) and with the State highway departments, to make a study and investigation of—

(1) the effects on design, construction, and maintenance of Federal-aid highways of (A) the use of vehicles of different dimensions, weights, and other specifications, and (B) the frequency of occurrences of such vehicles in the traffic stream,

(2) the proportionate share of the design, construction, and maintenance costs of the Federalaid highways attributable to each class of persons using such highways, such proportionate share to be based on the effects referred to in paragraph (1) and the benefits derived from the use of such highways, and

(3) any direct and indirect benefits accruing to any class which derives benefits from Federalaid highways, in addition to benefits from actual use of such highways, which are attributable to public expenditures for such highways.

(c) COORDINATION WITH OTHER STUDIES.-The Secretary of Commerce shall coordinate the study and investigation required by this section with

(1) the research and other activities authorized by section 10 of the Federal-Aid Highway Act of 1954, and

(2) the tests referred to in section 108(k) of this Act.

(d) REPORTS ON STUDY AND INVESTIGATION.-The Secretary of Commerce shall report to the Congress the results of the study and investigation required by this section. The final report shall be made as soon as possible, but in no event later than January 3, 1961. On or before March 1, 1957, March 1, 1958, March 1, 1959, and March 1, 1960, the Secretary of Commerce shall report to the Congress the progress that has been made in carrying out the study and investigation required by this section. Each such report shall be printed as a House document of the session of the Congress to which the report is made.14

(e) FUNDS FOR STUDY AND INVESTIGATION.-There are hereby authorized to be appropriated out of the Highway Trust Fund such sums as may be necessary to enable the Secretary of Commerce to carry out the provisions of this section.

SEC. 211. EFFECTIVE DATE OF TITLE.

This title shall take effect on the date of its enactment [June 29, 1956], except that the amendments made by sections 202, 203, 204, and 205 [amending certain sections of the Internal Revenue Code of 1954] shall take effect on July 1, 1956.

14 As amended by P.L. 85-823, Aug. 28, 1958, § 1, 72 Stat. 983.

Prior to the amendment the second and third sentences read as follows:

"The final report shall be made as soon as possible but in no event later than March 1, 1959. On or before March 1, 1957, and on or before March 1, 1958, the Secretary of Commerce shall report to the Congress the progress that has been made in carrying out the study and investigation required by this section." 70 Stat. 401-402.

APPENDIX XIII: STATE TAXATION OF INTERSTATE COM

MERCE-STUDY AND REPORT

(P.L. 86-272, Sept. 14, 1959, S. 2524, 73 Stat. 555)

AN ACT

Relating to the power of the States to impose net income taxes on income derived from interstate commerce, and authorizing studies by congressional committees of matters pertaining thereto.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, TITLE I-IMPOSITION OF MINIMUM STANDARD

SEC. 101. (a) No State, or political subdivision thereof, shall have power to impose, for any taxable year ending after the date of the enactment of this Act, a net income tax on the income derived within such State by any person from interstate commerce if the only business activities within such State by or on behalf of such person during such taxable year are either, or both, of the following:

(1) the solicitation of orders by such person, or his representative, in such State for sales of tangible personal property, which orders are sent outside the State for approval or rejection, and, if approved, are filled by shipment or delivery from a point outside the State; and

(2) the solicitation of orders by such person, or his representative, in such State in the name of or for the benefit of a prospective customer of such person, if orders by such customer to such person to enable such customer to fill orders resulting from such solicitation are orders described in paragraph (1).

(b) The provisions of subsection (a) shall not apply to the imposition of a net income tax by any State, or political subdivision thereof, with respect to—

(1) any corporation which is incorporated under the laws of such State; or

(2) any individual who, under the laws of such State, is domiciled in, or a resident of, such State.

(c) For purposes of subsection (a), a person shall not be considered to have engaged in business activities within a State during any taxable year merely by reason of sales in such State, or the solicitation of orders for sales in such State, of tangible personal property on behalf of such person by one or more independent contractors, or by reason of the maintenance of an office in such State by one or more independent contractors whose activities on behalf of such person in such State consist solely of making sales, or soliciting orders for sales, of tangible personal property. (d) For purposes of this section

(1) the term "independent contractor" means a commission agent, broker, or other independent contractor who is engaged in selling, or soliciting orders for the sale of, tangible personal property for more than one principal and who holds himself out as such in the regular course of his business activities; and

(2) the term "representative" does not include an independent contractor.

SEC. 102. (a) No State, or political subdivision thereof, shall have power to assess, after the date of the enactment of this Act, any net income tax which was imposed by such State or political subdivision, as the case may be, for any taxable year ending on or before such date, on the income derived within such State by any person from interstate commerce, if the imposition of such tax for a taxable year ending after such date is prohibited by section 101.

(b) The provisions of subsection (a) shall not be construed

(1) to invalidate the collection, on or before the date of the enactment of this Act, of any net income tax imposed for a taxable year ending on or before such date, or

(2) to prohibit the collection, after the date of the enactment of this Act, of any net income tax which was assessed on or before such date for a taxable year ending on or before such date. SEC. 103. For purposes of this title, the term "net income tax" means any tax imposed on, or measured by, net income.

SEC. 104. If any provision of this title or the application of such provision to any person or circumstances is held invalid, the remainder of this title or the application of such provision to persons or circumstances other than those to which it is held invalid, shall not be affected thereby.

TITLE II-STUDY AND REPORT BY CONGRESSIONAL COMMITTEES SEC. 201. The Committee on the Judiciary of the House of Representatives and the Committee on Finance of the United States Senate, acting separately or jointly, or both, or any duly authorized subcommittees thereof, shall make full and complete studies of all matters pertaining to the taxation of interstate commerce by the States, territories, and possessions of the United