Members of Congress Tout Repatriation as Way to Boost Infrastructure Revenue

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Office of Rep. John Delaney
By Eugene Mulero, Staff Reporter

This story appears in the Feb. 9 print edition of Transport Topics.

WASHINGTON — Talk of relying on repatriated revenue to pay for highway programs has gained considerable attention on Capitol Hill recently.

A few weeks ago, Rep. Bill Shuster (R-Pa.), the top transportation policy writer in the House of Representatives, endorsed the concept as lawmakers began to unveil several proposals:

• Rep. John Delaney (D-Md.) offered a bipartisan measure that would create a $50 billion infrastructure bank funded by selling bonds to private companies that could repatriate part of their overseas earnings tax-free.



• Sens. Barbara Boxer (D-Calif.) and Rand Paul (R-Ky.) teamed for a bill that would give businesses a reprieve from penalties for avoiding prior taxes if they agree to move money back to the United States and pay a 6.5% rate on it.

• Proponents also point to the Obama administration’s fiscal 2016 budget request, which proposed a transitional 14% tax on an estimated $2 trillion in past corporate foreign profits to help fund a six-year highway bill.

However, without support from key Senate leaders, advancing any repatriation measure before funding for highway programs expires in May will be difficult.

Sen. James Inhofe (R-Okla.), told Transport Topics “it’s going to involve a lot more than just” repatriation to avoid a funding shortfall of the Highway Trust Fund.

Sen. Orrin Hatch (R-Utah), chairman of the tax-writing Finance Committee, told reporters repatriation proposals need to be made part of a broader tax package to have a better chance of passing.

Not many congressional observers expect lawmakers to agree on significant changes to the tax code this year. Ken Orski, an expert monitoring state policy, said that “even if a [transportation] deal is to be cut, it is not likely that any corporate tax reform will be passed.”

“While both (Rep.) Paul Ryan and the White House want a business-tax reduction, they disagree on whether multinational corporations should be required to pay additional taxes for foreign earnings they want to repatriate,” said Orski, publisher of the transportation newsletter, Innovation NewsBriefs.

Last week, Ryan, chairman of the tax-writing House Ways and Means Committee, came out against funding structures in the administration’s budget request.

“Tackling big policy challenges, like expanding American exports and reforming our tax code, requires not just hard work, but also an appreciation that our economy grows best from the bottom up with empowered individuals, rather than top down through government,” Ryan said.

Last year, the White House and Ryan’s predecessor, former Chairman Dave Camp (R-Mich.), looked to repatriation as a way to boost transportation dollars. Congress did not act on either plan.

The tax system allows companies to defer a tax until they bring back foreign profits. But most multinational companies choose to keep or reinvest profits overseas instead of subjecting them to a 35% repatriation tax.

A 2013 study by U.S. Public Interest Research Group, a consumer nonprofit firm, determined that 82 out of the top 100 publicly traded companies, as measured by revenue, maintain subsidiaries in offshore tax havens. Overall, the companies report holding nearly $1.2 trillion offshore, with 15 of them accounting for two-thirds of the offshore cash.

Since 2008, when Congress started to bail out the trust fund with money from the general fund, lawmakers have struggled to agree on a way to ensure long-term funding. Although discussions about repatriation continue, leading transportation groups — such as the U.S. Chamber of Commerce, AAA and American Trucking Associations — are calling on Congress to increase federal fuel taxes.