$126.5bn for transport infra through tax reform

US Congressman and Chairman of the House Ways and Means Committee Dave Camp has introduced a comprehensive tax reform bill which would use repatriated corporate earnings to provide a one-time supplement of $126.5 billion to the Highway Trust Fund (HTF).

Corporations’ foreign earnings would be taxed at a reduced rate of 8.75 percent, payable over eight years, which would in turn fund highway and infrastructure investment through the HTF during that same period.

Established in 1956 to fund the country’s interstate highway system, US Secretary of Transportation Anthony Foxx has warned that HTF may run out of funds as early as August.

“We can, and need, to work together to craft a plan that fixes our broken [tax] code and strengthens the economy so there are more jobs and bigger paychecks for hardworking taxpayers,” Camp, a Republican from Michigan, said in a statement announcing the draft legislation.

The Tax Reform Act of 2014, as the bill is known, would also reduce the corporate tax rate from 35 percent currently to 25 percent.

According to an analysis conducted by the independent, non-partisan Joint Committee on Taxation, Camp’s bill would create up to 1.8 million new private sector jobs, would increase gross domestic product by up to $3.4 trillion and would not increase the budget deficit.

A week after Camp introduced the draft legislation, President Barack Obama presented his proposed budget for 2015, which includes a $302 billion surface transportation re-authorisation proposal.

Both proposals come at a time when infrastructure in the US seems to be gaining momentum with several bills focusing on infrastructure financing working their way through both chambers of Congress and enjoying bipartisan support.

“I applaud chairman Camp for adopting the framework of using the record levels of overseas capital to fund much needed investments in our nation’s infrastructure,” Congressman John Delaney commented in a separate statement.

“There’s growing agreement among Republicans, Democrats, and Independents, that this is the right approach,” Delaney said.

A Democrat from Maryland, Delaney is the sponsor of the Partnership to Build America Act, which calls for the creation of a $50 billion infrastructure bank that would be funded by repatriated corporate earnings.

Introduced in May 2013, Delaney’s bill currently has 29 Democratic and 26 Republican co-sponsors in the House. A Senate version of the bill was introduced in January and also has bipartisan support.

Both the President and Foxx have emphasised that passing a surface transportation re-authorisation bill this year is a priority, especially in light of MAP-21, the authorisation bill enacted in October 2012 which is set to expire in September.