Senators Harry Reid (D-Nev.) and Rand Paul (R-Ky.) are recommending a tax holiday that would allow multinational parent corporations to deduct 85% of the money made by their foreign subsidiaries, The New York Times reported. “Repatriation” of that foreign-subsidiary income would bring between $20 billion and $30 billion into the U.S. Treasury in the next two years, the senators estimate. Part of that increased tax revenue could be used to replenish the Highway Trust Fund (HTF).
Meanwhile, the clock is ticking down to the zero hour when the Highway Trust Fund has no more money. By mid-July, the balance in the HTF is expected to dip below the $4 billion level where the U.S. DOT will have to slow payments to the states for construction projects.
“Just the threat of Congress delaying funding has forced states to cut back already,” said Jeff Shoaf, senior executive director for government affairs at the Associated General Contractors of America, according to The New York Times.
The tax holiday idea has problems, opponents say, such as the fact that Congress vowed never to offer such a holiday again after a similar action in 2004 for fear that it would lose its effectiveness as corporations hold onto their offshore profits, waiting for the next better tax deal.
Also, the effect of providing a tax holiday becomes expensive to the government after a while. The plan would result in a net loss of revenue as early as 2017, according to the Joint Committee on Taxation and could cost as much as $96 billion by 2024. Reid and Paul think they have found a way to structure a plan to avoid problems.
Meanwhile the White House issued a policy statement yesterday opposing passage of House bill H.R. 4745, making appropriations for the departments of Transportation, Housing and Urban Development.
“The bill fails to make needed investments in our Nation's infrastructure,” the statement said.
The House appropriations bill under consideration would allocate only $100 million for the Transportation Investment Generating Economic Recovery (TIGER) infrastructure grant program, The Hill reported, compared with $550 million in the corresponding Senate proposal.
“The [House Appropriations] Committee's proposed funding level, which freezes obligation limitations for highway, transit, and highway safety at FY 2014 authorized levels, demonstrates why a robust, multi-year authorization is essential to provide the funding boost that States and municipalities require to make the necessary and transformative transportation investments that their citizens are demanding,” said the White House statement.