Delaney, Yoho, Davis to Introduce Bipartisan Bills Using International Tax Reform to Rebuild America’s Infrastructure
WASHINGTON – In the coming weeks Congressman John K. Delaney (D-MD-6), Congressman Ted Yoho (R-FL-3) and Congressman Rodney Davis (R-IL-13) will introduce a pair of bipartisan infrastructure bills using revenues from international tax reform to upgrade America’s infrastructure. Congressman Delaney and Congressman Davis will bring forward The Partnership to Build America Act, legislation that creates a new American Infrastructure Fund (AIF) to finance state and local projects. Congressman Delaney and Congressman Yoho will file The Infrastructure 2.0 Act, legislation that includes the AIF and provides additional long-term revenues to stabilize and expand the Highway Trust Fund.
Delaney has advocated for this framework for the last four years, drawing support from over 40 Republican and 40 Democratic cosponsors in the House and Senate since 2013. Delaney’s framework was also included in President Obama’s budget. President-elect Donald Trump has repeatedly stated his support for new infrastructure and for international tax reform.
“If the next President and leaders in Congress want to rebuild America in a fiscally-responsible way that has deep bipartisan support, we’ve given them a blueprint. A bold infrastructure-tax deal that combines legitimate support for new projects and pro-growth reform would be transformative for the country, for our economy and our quality of life,” said Congressman Delaney. “Congressman Yoho, Congressman Davis and I represent different districts and bring different perspectives to Washington, but we see the same set of facts and we’re excited to lead the effort to get a smart and fair infrastructure-tax deal done.”
“The Infrastructure 2.0 Act is a common sense piece of legislation that provides secure long-term funding for our nation’s ailing infrastructure,” said Congressman Yoho. “The bill provides dependable funding to the Highway Trust Fund (HTF) outside of the usual Washington appropriations process and tax payer contributions - which often underfunds the HTF. This will bring an air of certainty to funding America’s roads and bridges while allowing for long term planning. Additionally this will remove the uncertainty that accompanies Washington’s usual short term budget band-aids and gimmicks.”
“If our country is going to invest in infrastructure and spur job creation, we need innovative, bipartisan funding solutions like this legislation that brings public and private entities together to leverage investments,” said Congressman Davis. “I am encouraged by President-elect Trump's interest in passing an infrastructure bill and I hope the Partnership to Build America Act will be part of it.”
The Partnership to Build America Act – To Be Introduced by Rep. Delaney & Rep. Davis
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 – To Be Introduced by Rep. Delaney & Rep. Yoho
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.