Delaney on ASCE Report Card: America Deserves Better Than a D+ Infrastructure
WASHINGTON – Today, the American Society of Civil Engineers (ASCE) released their 2017 Report Card for America’s Infrastructure, giving the United States a cumulative grade of D+. Among the specific grades, ASCE graded America’s roads a D, America’s dams a D, drinking water a D and ports a C+.
“American families, workers and businesses deserve better than a D+ infrastructure. After getting this report card, if Congress and the President don’t act, everyone should be sent to detention,” said Congressman John K. Delaney (MD-6). “Reading this report should be mandatory homework for every member of Congress and President Trump. This alarming report makes it clear that we have a national infrastructure crisis and we need a real solution - no more gimmicks, no more patches. In today’s political climate, the only way we can solve a problem this big is with an innovative solution that cuts through the gridlock and that’s using revenues from international tax reform to rebuild here at home.”
Since taking office in 2013, Congressman Delaney has been a national leader on infrastructure policy, spearheading the effort to rebuild America’s infrastructure using revenues from international tax reform. Over 40 Democrats and 40 Republicans have cosponsored Delaney legislation to fund and finance new infrastructure investment using repatriation.
Congressman Delaney has two bills combining international tax reform and infrastructure investment. The Partnership to Build America Act creates a new American Infrastructure Fund to finance state and local infrastructure projects. The Infrastructure 2.0 Act, which includes more comprehensive tax reforms, creates both the American Infrastructure Fund and provides additional long-term revenues to stabilize and expand the Highway Trust Fund. (Full bill summaries below.)
ASCE’s full 2017 Report Card for America’s Infrastructure is available online here. The American Society of Civil Engineers represents more than 150,000 members of the civil engineering profession and was founded in 1852.
The Partnership to Build America Act
The American Infrastructure Fund
- The Partnership to Build America Act creates the American Infrastructure Fund (AIF) to provide financing to state and local governments for new infrastructure.
- Transportation, energy, communications, water and education projects are eligible to receive AIF financing. Local governments would apply directly to the AIF for support.
- To encourage public-private partnerships 35% of AIF supported projects must have at least 10% of their financing be private debt or equity.
- The AIF will be capitalized by $50 billion in infrastructure bond sales and leveraged at a 15:1 ratio to provide up to $750 billion in loans or guarantees.
Funded by an Infrastructure Bond Sale
- Rather than using appropriated funds out of the federal budget to establish the American Infrastructure Fund, the Partnership to Build America Act uses a bond sale.
- AIF bonds would have a 50-year term, pay a 1% fixed rate return and would not be guaranteed by the U.S. government. These bonds are not intended to be a good investment on their own and are transferable after purchase.
- To incentivize companies to purchase these bonds, U.S. companies would be allowed to repatriate a certain amount of their overseas earnings tax free for every $1.00 they invest in the bonds. This multiplier will be set by a “reverse Dutch auction” – which allows the market to set the rate, ensuring that enough funds are raised.
- Assuming a 1:4 ratio is set by the auction; a company will be able to repatriate $4.00 tax-free for every $1 in AIF bonds they purchase.
The Infrastructure 2.0 Act
Building a World Class 21st Century Infrastructure with Revenue from Deemed Repatriation at 8.75% Tax Rate
- Under the Infrastructure 2.0 Act, existing overseas profits accumulated by U.S. multi-national corporations would be subject to a mandatory, one-time 8.75% tax, replacing deferral option and current rate of 35%.
- $120 billion to the Highway Trust Fund, enough to meet funding gap at increased levels for six years.
- $50 billion to capitalize the American Infrastructure Fund (AIF)
- $25 million pilot program to create regional infrastructure accelerators, similar to the West Coast Infrastructure Exchange
- This frees the estimated $2 trillion in overseas earnings to return to the United States, spurring private sector re-investment and growth.
Creating Long-term Highway Trust Fund Solvency and Policy Certainty
- The Infrastructure 2.0 Act provides six years of Highway Trust Fund solvency, providing immediate certainty to the private sector and policymakers.
- The legislation also establishes a bipartisan and bicameral commission that is tasked with developing a solution for permanent solvency of the Highway Trust Fund.
Building a Path for Broader Tax Reform
- The Infrastructure 2.0 Act creates an eighteen-month deadline for international tax reform.
- To encourage action, the legislation includes a forcing function: if reform is not enacted, a fallback international tax package to make U.S. business climate more competitive would be implemented.
- This pro-growth fallback reform package would end deferral, reduce anti-competitive over taxation, decrease taxes for companies paying fair rates abroad but increase taxes for companies in tax havens. This would eliminate the lock-out effect and allow for the free flow of profits back to the United States.
- Under this option, for Active Market Foreign Income, a company would pay a 12.25% tax to the U.S. on overseas profits if they are currently paying no tax and a 2% tax to the U.S. if they are already paying the OECD average of 25% abroad, with a sliding scale in-between.