Obama to introduce $478B highway 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 bill would be paid for with $240 billion in gas tax revenue and $238 billion through a new tax 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.
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.
White House officials told reporters on a conference call that the highway bill would include an increase of up to $7.5 billion in TIGER grants, the competitive program that was tapped to help fund Detroit's M-1 light rail project. And transit funding would jump 75 percent over the six-year period.
The $3.99 trillion budget would seek funding for another 36 manufacturing institutes — public-private partnerships to boost advanced technology — on top of the nine slated for completion by the end of 2015. In July, Detroit landed a $148 million lightweight-metals manufacturing institute.
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.
Michigan’s federal funding for highways has stagnated at a little more than $1 billion annually since 2010. 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, would raise $300 million fpr public education.