WASHINGTON -- The House yesterday resoundingly rejected a bill to ease tax law curbs on high-speed rail bonds after several members strongly objected to a provision in the measure to institute a new tax reporting requirement for local governments.

The House had attempted to pass the bill on Monday by voice vote as a noncontroversial "suspension" bill, but Rep. Fred Grandy, R-Iowa, demanded a roll-call vote. He and several other Republican lawmakers complained that the reporting requirement would unduly burden localities.

Not only did the bill fail to garner the needed two-thirds required under House rules to pass a suspension bill, but a majority of members rejected the measure. The vote against the bill was 369 to 48.

The proposal for the reporting requirement would have forced governments below the state level -- including cities, towns, and countries -- to notify taxpayers and the Internal Revenue Service as to the amount of property tax paid by residents each year that is deductible for federal income tax purposes. Rep. Bill Coyne, D-Pa., proposed the requirement to offset revenue losses expected to occur if his proposal for high-speed rail bonds was enacted. Under current law, 75% of each high-speed rail bond issue is exempt from the volume cap. Rep. Coyne's bill would have made those issues completely exempt.

Proponents of the reporting requirement have said that it would raise revenue for the federal government by decreasing the amount of property tax deductions claimed by taxpayers on their federal income tax forms.

But municipal lobbyists, who became aware of the tax reporting proposal last week, said the requirement would be an unwarranted burden on local governments, and they waged a campaign to create opposition to it in the House.

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