On Capitol Hill, the talk of the transportation world has largely, if not exclusively, centered around whether an increase to the present 18.4 cents per gallon gasoline tax is the prudent measure to take in order to assuage the possibility of infrastructure funding failure in the imminent future. Despite the usual side-of-the-aisle loyalty that tax discussions typically generate, this debate has grown murkier as the weeks have passed with members of both political parties dog-paddling their way into the deeper middle area of discursive waters.
Now, finally putting his stamp on a proposal, President Obama has proffered legislation that would spend $487 billion over the next six years to boost the nation’s transportation infrastructure. With lawmakers harried over sustainable funding means, the president’s proposal would seem to put paid to the debate over a gas tax increase.
The president’s plan, “repatriation,” calls for a one-time tax holiday for companies that have investments overseas, by which those companies would bring earning back into the U.S. at a 14% tax rate, a move that would generate some $238 billion in revenue for the federal government, revenue that could then be applied to infrastructure projects and planning.
The Department of Transportation’s Highway Trust Fund would remain solvent for a further seven years under the president’s plan, according to White House officials, and citizens would not incur a heavier lien at the pump.
"The budget proposes to invest in infrastructure through a comprehensive six-year surface transportation reauthorization proposal, as well as tax incentives for state and local infrastructure investment, a new Infrastructure Bank, and other initiatives," the White House said in its budget document. "The federal government plays a vital role in infrastructure investment, and the nation’s roads, bridges, and other surface transportation infrastructure systems are badly in need of upgrades and repairs."
Obama’s plan breaks down into spending of $317 billion on roads and bridges through 2021, with $94.7 billion earmarked for 2016 alone, in effort to get the plan rolling with some fiscal vigor. Moreover, $143 billion would go toward federal transit projects and $18 billion toward freight improvements.
While a significant faction with in the transportation segment insists that a gas-tax increase would be the simplest and most dependable way to grow the revenue needed, the recent plummet in gas prices, along with analysts’ suggestion that such low prices are not really going anywhere anytime soon, has hampered widespread tax increase support along members of Congress. The gas tax, which predates the highway system by nearly two decades, has not been increased since 1993. Higher fuel efficiency in vehicles likewise impedes a clear benefit to higher taxes.
It is no surprise that the president’s proposal already has its critics. “Tax holiday proposals designed to pay for the transportation bill sound great until you look at the details," Senate Finance Committee Chairman Orrin Hatch (R-Utah) said last week after Sen. Rand Paul (R-Ky) and Barbara Boxer (D-Calif.) released a plan that was similar to Obama's. "After all, the Joint Committee on Taxation (JCT) has clearly detailed how a stand-alone temporary tax holiday would end up costing the government in the end. Saying you're going to use something that loses money to pay for anything is just wrong."
Meanwhile, some opponents have been attempting to pony up their own alternative plans, in advance of the looming 2016 presidential race. "The interstate highway system is of vital importance to our economy," Paul, a likely 2016 GOP presidential candidate, said in a statement about his own transportation plan. "All across the country, bridges and roads are deficient and in need of replacement. We can help fund new construction and repair by lowering the repatriation rate and bringing money held by U.S. companies back home. This would mean no new taxes, but more revenue, and it is a solution that should win support from both political parties.”
The current transportation funding bill is scheduled to expire on May 31.
