U.S. to unveil $478 billion highway, transit bill
Washington — President Barack Obama on Monday will unveil a $478 billion six-year highway and transit bill, the latest effort by the White House to boost infrastructure through new taxes on foreign profits of U.S. businesses.
The bill replaces the $302 billion four-year plan the administration offered last year that didn't go anywhere. Instead, Congress opted to approve an $11 billion stop-gap measure in August to keep the highway trust fund solvent through the end of May.
On Wednesday, Transportation Secretary Anthony Foxx told Congress a "new and improved" highway funding bill was coming.
"We must do something dramatic — to hell with the politics," Foxx told the Senate Environment and Public Works Committee. He said a fix needs to be found sooner because states may delay some summer road repairs before May if they don't have a clear sign that the funding will be there. "We need to invest more," Foxx said. "The public has gotten used to a deteriorating system."
The White House said in a fact sheet distributed by an official that the new funds are aimed at repairing "our crumbling roads and bridges, and modernize our infrastructure so businesses can create good jobs here at home. These investments would be paid for by closing tax loopholes as part of reforming the business tax rules to level the playing field and make sure everyone pays their fair share."
The bill would be paid for with $240 billion in gas tax revenue and $238 billion through a new tax levy on foreign profits of U.S. firms. The proposal would impose a one-time 14 percent transition tax on the up-to-$2 trillion of foreign earnings that U.S. companies hold overseas.
"This transition tax would mean that companies have to pay U.S. tax right now on the $2 trillion they already have overseas, rather than being able to delay paying any U.S. tax indefinitely. Unlike a voluntary repatriation holiday, which the president opposes and which would lose revenue, the president's proposed transition tax is a one-time, mandatory tax on previously untaxed foreign earnings, regardless of whether the earnings are repatriated," the White House fact sheet said.
Going forward, U.S. businesses would pay a 19 percent U.S. tax on all foreign earnings as they earn them, while providing a tax credit for foreign taxes paid. The proposal also seeks to end other measures that allow U.S. companies to shift profits to lower-tax countries through "inversions." Some larger U.S. companies have merged with smaller foreign firms in an effort to avoid most U.S. taxes.
The tax measures could have a major impact on large Michigan companies like General Motors Co., Ford Motor Co. and Dow Chemical Co. with significant foreign operations.
The tax reform push is because the traditional source of revenue is declining.
From 1956 until 1993, Congress regularly increased gas taxes — from an initial 3 cents a gallon to the current 18.4 cents. Had the gas tax been adjusted for inflation, it would be 30 cents a gallon today.
But raising the gas tax has been one of the most unpopular ideas on Capitol Hill in the past two decades. Because Americans are driving less while driving more fuel-efficient cars, trucks and sport utility vehicles, less revenue is being raised to fix the roads. During the past six years, Congress has transferred nearly $70 billion from the general fund into the highway trust fund to keep the road repairs going in more than 30 short-term funding measures.
White House spokeswoman Jennifer Friedman declined Sunday to say if the new highway bill will include the same — or revised — sweeping auto safety reforms proposed last year by the administration.
The last would have hiked maximum fines to $300 million for automakers who fail to recall vehicles in a timely fashion over the current limit of $35 million. It would have forced rental car and used car companies to repair recalled vehicles before they are rented again. NHTSA would get new authority to get unsafe vehicles off the roads quickly it deems an "imminent hazard."
Michigan's federal funding for highways has stagnated at a little more than $1 billion annually since 2010.
In 2011, the Congressional Budget Office estimated that meeting future highway needs between 2012 and 2022 would require another $110 billion for the trust fund. The Government Accountability Office says Congress could hike gas taxes to 31.6 cents to 46.6 cents a gallon to fix the roads, or impose a tax of 0.9 cent to 2.2 cents per mile on all travel.
At least eight states have hiked gas taxes since 2013. Voters in Michigan on May 5 will decide whether to hike the sales tax that would help increase funding for roads by $1.2 billion annually and public education $300 million.