DALLAS - Taxing the overseas earnings of corporations could provide the revenue needed for years of federal transportation funding, according to reports released Wednesday by the Senate Finance Committee.
A report from the committee's working group on international tax reform headed by Sen. Rob Portman, R-Ohio, and Sen. Charles Schumer, D-N.Y., does not provide an estimate of the revenue that would be generated or what the proposed tax rate should be.
But it says the starting point for corporate tax reform should be the repatriation proposals in President Obama's fiscal 2016 budget plan and the one offered by former Rep. David Camp, R-Mich. In 2014 when he was chairman of the House Ways and Means Committee, the study group said.
"The co-chairs have agreed to the framework contemplated by Chairman Camp and President Obama," the report said.
Camp's plan would have levied an 8.75% tax on foreign earnings voluntarily brought into the U.S. over eight years to generate a total of $126.5 billion to the Highway Trust Fund.
Obama's proposed $478 billion, four-year Grow America Act transportation plan would be funded with $238 billion from a mandatory 14% tax on corporate overseas earnings and $240 billion of gasoline and diesel tax collections.
Overseas earnings are currently taxed at 35%.
Sen. Orrin Hatch, R-Utah, who appointed the five bipartisan tax-reform study groups in January, has proposed generating the additional revenues needed for a multiyear highway bill with changes to the comprehensive tax code rather than corporate repatriation.
"Any remake of the U.S. tax code, should work to lower the rates and broaden the base," Hatch said Wednesday in releasing the reports prepared by the study groups.
Schumer said the tax revenues on an estimated $2 trillion of overseas earnings could provide the $100 billion or so needed to bolster the gasoline and diesel tax collections, which fall short of expenditures from the HTF, over the next four years.
"These proposals would right the ship, provide a potential funding source for transportation reauthorization, and allow the United States to compete on a level playing field," Schumer said in a release today.
Sen. Sherrod Brown, D-Ohio, a member of the international tax panel, said Congress has an opportunity to modernize the tax system "and use this one-time revenue to pay for the long-term highway bill our nation so desperately needs."
The finance committee's community development and infrastructure study group headed by Sen. Dean Heller, R-Nev., and Sen. Michael Bennett, D-Colo., also endorsed the use of corporate tax reform for transportation funding.
"Fundamental tax reform can provide an opportunity to address the fiscal solvency of American infrastructure," Heller and Bennett said.
"We offer a bipartisan option that could bring the HTF into solvency while addressing fundamental tax reform," they said. "While such change will neither occur overnight nor will be easy, transportation investments, which are in critical need, cannot afford to wait."
However, the report also said that while tax reform may be a viable revenue source for a few years, it would not be a long-term solution for infrastructure funding. "[Repatriation] does not correct the declining revenues of the gas tax, nor does it address the increase in emerging technologies among vehicles today," the working group study said. It recommended a pilot program with 5,000 volunteer motorists to study a vehicle-miles-traveled fee system.
Federal gasoline tax collections are expected to decline by 16% over the next decade, from $24.3 billion in fiscal 2015 to $20.3 billion in FY-2023, according to a Congressional Budget Office report cited in the study.
President Obama remains hopeful about bipartisan agreement on tax reform for transportation funding, presidential press secretary Josh Earnest told reporters on Tuesday
"The issue that we're focused on is knowing that the Highway Trust Fund is scheduled to be depleted at the end of this month without some congressional action," he said during a press briefing.
"We believe that there is a way for us to do some elements of tax reform in a way that raises revenue," he said. "The administration has been very clear about what we believe is the best way for us to make investments in infrastructure, and that's closing loopholes that will generate some revenue."
