House Democrats introduced two bills to shore up the Highway Trust Fund with money from corporate taxes.
The Highway Trust Fund, which pays to maintain the nation’s highways, is expected to run out of money on July 31, and lawmakers are scrambling to pass another extension. Last week, the House passed a short-term $8.1 billion extension of highway and transit funding, but only through December 18 of this year (see House Passes Funding for U.S. Highways Paid with Tax Compliance Measures). However, many lawmakers want to pay for a longer extension, as the last extension only just passed in May.
Rep. Chris Van Hollen, D-Md., the ranking member on the House Budget Committee, introduced the Grow America Act last week with Rep. Steve Israel, D-N.Y., who chairs the House Democratic Policy and Communications Committee, Transportation and Infrastructure Committee ranking member Peter DeFazio, D-Ore., Ways and Means Committee ranking member Sander Levin, D-Mich., and Rep. Eleanor Holmes Norton, D-D.C., ranking member of the Highways and Transit Subcommittee. The legislation would provide six years of expanded transportation funding, and crack down on corporate tax inversions to help pay for that investment.
The bill would authorize President Obama’s six-year transportation plan, providing $478 billion over that period to rebuild America’s infrastructure—a major increase over current levels that is estimated add nearly 2 million jobs to our economy. The bill would partially pay for that investment by tightening restrictions on corporate tax inversions, limiting the ability of American companies to avoid U.S. taxes by moving their domicile abroad. The corporate tax inversion provision is estimated to raise $41 billion. Combined with existing highway trust fund revenues, it would pay for the first two years of the legislation.
“The Grow America Act would make the critical investment necessary to improve America’s crumbling infrastructure and put millions of people to work at good paying jobs,” Van Hollen said in a statement. “It also makes a significant down payment on that investment by cracking down on companies that try to renounce their American citizenship to avoid paying their fair share in taxes. Together, we can finally stop governing by crisis, create jobs, rebuild our roads and bridges, and bring America’s infrastructure into the 21st century.”
A separate bill was introduced last week by Rep. John K. Delaney, D-Md. The Infrastructure 2.0 Act would use revenues from international tax reform to fund a six-year highway bill and create a new American Infrastructure Fund to finance additional state and local projects.
The bill would create an 18-month deadline for international tax reform. If reform is not enacted within that time, a fallback international tax package to make U.S. business climate more competitive would be implemented automatically. The fallback reform package would end tax deferral for multinational companies, decreasing taxes for companies paying relatively high rates abroad but increasing taxes for companies in tax havens where tax rates are much less. Under this option, for active-market foreign income, a company would pay a 12.25 percent tax to the U.S. on overseas profits if they are currently paying no tax and a 2 percent tax to the U.S. if they are already paying an average of 25 percent abroad, with a sliding scale in between.
“The facts are right before our eyes: the clock is about to run out again and all the old answers aren’t viable anymore,” Delaney said in a statement. “Let’s pass what’s hopefully our last short-term patch and then immediately start hammering out a long-term bill that uses international corporate tax reform. Using deemed repatriation paired with broader reform to bring money back home for roads and bridges will require both parties to leave their ideological comfort zone, but it is absolutely the right thing to do for the country. I’ve met with over 100 Republicans and 100 Democrats, personally, to pitch this solution and I know that the support is there. We can get this done. Let’s start today.”
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