In June, Washingtonians learned that surging sales tax revenue for the next three years could wipe out an expected state budget revenue shortfall. “This is a great day to be budget director,” said Victor Moore, who works in the governor’s office.

But if some members of Congress get their way, it will be a short-lived celebration. They want to give national corporations a tax break and finance it with money normally collected by states. The benignly titled Business Activity Simplification Act (H.R. 1956) would achieve simplicity by shielding a lot of business activity from state taxation. The cost to states could be enormous, though proponents say it won’t be as much as estimated by either the Congressional Budget Office or the National Governors Association.

CBO puts the first-year loss at $1 billion, rising to $3 billion by 2011 as corporations adjust to take advantage of the new law. An NGA survey of states reports that losses could hit $6 billion annually. Meanwhile, the Council on State Taxation, which lobbies on behalf of national and multinational corporations, estimates that the bill would cost states only $434 million in the first year. COST does not estimate the inevitable tax avoidance practices that such a law would trigger.

House leadership pulled the bill from an expected vote on Tuesday, saying it wanted to study the revenue ramifications more closely.

Under the bill, 10 states would suffer 70 percent of the revenue losses, with Washington state leading the pack, according to the governors group. The state Department of Revenue estimates that in the first year Washington state would lose $134 million and eventually as much as $689 million annually as companies adjusted.

Because of the huge potential revenue losses, the state’s congressional delegation has united against the bill. Many members of Congress like the bill because the increase in corporate profits and decrease in deductions for state taxes would mean greater federal tax collections. If Congress wants to give corporations more tax breaks, it should cut federal taxes. Unlike Congress, states have to balance their budgets.

The bill achieves tax savings for corporations by making “physical presence” the trigger for taxation. The key is whether a business has representatives in a state for a certain amount of time. But this change ignores the way modern corporations do business in our air-travel and Internet world. What should matter is whether a company is engaging in business activity in a state.

If this bill were to become law, local businesses would be at a disadvantage because they would be subject to a tax that a multistate competitor is allowed to skirt. The reality for state budget writers is that the tax burden would shift to local businesses and individuals or services would be cut.

In one sense, the state’s political leadership would be getting a deserved comeuppance, because it has done nothing to change the dubious practice of relying so heavily on the business and occupation tax. But that issue should be decided on its merits and the solution should help more businesses.

Though many states wouldn’t see huge revenue losses from the bill, the governors group is firmly against this measure. It rightly sees that if such a law passes, Congress will be emboldened to wrest local control from states on other important matters.

States can’t effectively govern themselves with this kind of federal meddling.