Improving U.S. infrastructure starts with tax reform by John Delaney
John Delaney, a Democrat, represents Maryland’s 6th District in the U.S. House.
After years of standoffs, Congress faces another dangerous deadline this summer: the looming insolvency of the Highway Trust Fund, which funds roughly 90 percent of federal surface transportation projects in the United States. What’s different this time is that there is increased willingness on both sides of the aisle to adopt a bipartisan solution that would use the vast amount of U.S. cash overseas to finance new infrastructure investment.
In the past year, members of both parties in Washington have made significant progress toward a consensus recognizing that our corporate tax code is broken, that we still have a major jobs crisis and that our crumbling national infrastructure is in a state of emergency. What was once a fringe idea — finding a way to use the record levels of overseas capital to finance new projects in the United States — is now mainstream. The support is there; we just have to work out the details. . .
Congress should seize this momentum and strike an even larger deal that reforms our international tax system and increases U.S. investment in infrastructure. Specifically, we should do three things. First, place a mandatory tax on all existing overseas earnings at a 10 percent rate, which can be paid over 10 years. Once paid, overseas earnings can flow freely back to the United States. Second, we should allocate 60 percent of the revenue generated from the mandatory tax toward prefunding the Highway Trust Fund shortfall for the next six years and 40?percent toward capitalizing the American Infrastructure Fund as described in the Partnership to Build America Act. Third, for all future earnings, we should adopt a modified territorial tax system with a minimum effective tax and strong enforcement standards for cost accounting.
Taken together, these actions would allow the federal government to continue funding transportation projects in the traditional way, without the threat of insolvency or job-killing project cancellations, and dramatically increase our nation’s overall investment in infrastructure. This would create jobs and improve competitiveness, as well as create a path for the nearly $2 trillion in U.S. corporate cash sitting overseas to be reinvested in our economy.
http://www.washingtonpost.com/opinions/improving-us-infrastructure-starts-with-tax-reform/2014/05/02/97c3769c-cbc7-11e3-95f7-7ecdde72d2ea_story.html
