The chairman of the House Transportation and Infrastructure (T&I) Committee said today he supports in principle a proposal to use foreign-earned profits repatriated by U.S. firms to fund improvements to the country's highways and mass transit systems.
Speaking to reporters after a business-industry roundtable in Atlanta, Rep. Bill Shuster (R-Pa.) said such an initiative, which is the centerpiece of bills introduced in the House and Senate, could gain traction because the two cosponsors of the Senate version, Sens. Barbara Boxer (D-Calif.) and Rand Paul (R-Ky.), carry a great deal of clout. Boxer, ranking minority member of the Senate Environment and Public Works Committee, was key in spearheading the most recent transport-spending bill through Congress in 2012; Paul is a candidate for president in 2016.
Shuster noted that Boxer and Paul are political polar opposites, and it's significant that the two have surmounted their differences to cosponsor the bill, which is called the "Invest in Transportation Act of 2015."
"I think we can get something done," Shuster said, adding that he is open to discussing a broad range of ideas to pay for infrastructure improvements.
One idea off the table is an increase in federal motor-fuels taxes, which have remained at the same levels since 1993. Shuster said there's virtually no political appetite to increase federal taxes on diesel fuel and gasoline. Motor-fuels taxes are the primary source of revenue to fund transport programs.
The current transport spending law, signed by President Obama in July 2012, was originally set to expire at the end of September 2014. It has since received two extensions, with the latest set to end on July 31. Shuster, who has said he wants a six-year spending bill, said there would almost surely be another extension to run through November or December to ensure that projects are funded through the fall construction season in warm-weather regions.
Shuster's committee does not have jurisdiction over transportation funding in the House; the power to appropriate funds rests with the House Appropriations Committee, while the House Ways and Means Committee handles tax-related legislation. However, the opinions of the T&I committee chair are usually taken seriously when transportation issues are concerned.
The Paul-Boxer bill allows U.S. companies to voluntarily repatriate, or bring back, foreign-earned profits at a special tax rate of 6.5 percent—well below the 35-percent corporate income-tax rate--as long as the proceeds are dedicated to the Highway Trust Fund, the mechanism used to finance highway and transit programs. Companies could take five years to transfer proceeds to the Trust Fund. Funds to be transferred must have been earned no earlier than 2015, and repatriated funds cannot be spent on executive compensation increases, stock buybacks, or shareholder dividends for three years following the program's end.
In the House, Rep. John K. Delaney (D-Md.) reintroduced legislation earlier this year to create an infrastructure fund seeded by the sale of $50 billion in bonds at 50-year maturities. U.S. corporations would be encouraged to buy the bonds by repatriating, tax free, part of their foreign earnings for each dollar they invest in the fund. Meanwhile, President Obama's fiscal year 2016 budget request called for a mandatory one-time 14-percent repatriation tax to pay for half of his six-year, $478 billion infrastructure-funding proposal. The balance would come from motor-fuels tax receipts.
Sen. Orrin Hatch (R-Utah) and Rep. Paul Ryan (R-Wis.), chairs of the Senate and House tax-writing committees, have already declared the White House proposal a nonstarter. According to the Congressional Budget Office (CBO), just to maintain the Highway Trust Fund at its current level over the next six years would take $90 billion in additional subsidies from the general treasury, a shortfall that may be difficult to eliminate. For nearly a decade, Congress has diverted money from the general fund to shore up the Highway Trust Fund, which has been chronically short of cash.
Trust fund revenue is likely to decline in the years ahead as vehicles of all types become more fuel-efficient and rely less on traditional energy sources that have provided excise taxes. This has led lawmakers, regulators, and analysts to seriously rethink how to fund highway construction programs as increasing freight and passenger traffic puts additional demands on a battered infrastructure.
Some, like C. Kenneth Orski, a public-policy consultant on infrastructure issues, have called for increased investment by state and local governments in their own infrastructure, with Trust Fund revenue allocated to programs and issues of national significance. Those national programs could include maintaining and improving the interstate system, fixing aging bridges, and supporting highway-safety and research-and-development programs.
Editor's note: An earlier version of this story identified Barbara Boxer as chair of the Senate Environment and Public Works Committee. James Inhofe (R-Okla.) chairs that committee. DC Velocity regrets the error.