Delaney: Fund Infrastructure Using Repatriation, Not Federal Employee Retirement Plans

WASHINGTON – Next week the Senate is expected to consider a short-term patch to the Highway Trust Fund, potentially using revenues from cuts to the federal Thrift Savings Program used by many federal employees. The Highway Trust Fund, the nation’s primary source of funding for federal infrastructure projects, will lose spending authority at the end of July.

On Wednesday, the House passed a short-term extension through December, allowing Congress to finalize a long-term highway bill using international tax reform. Since 2013, Congressman John K. Delaney (MD-6) has built support for this approach, which has now been echoed by President Obama, former House Ways & Means Chairman Dave Camp and congressional leaders on both sides of the aisle. Delaney’s Infrastructure 2.0 Act uses deemed repatriation at 8.75% to fund a six-year highway bill at increased levels and create a new infrastructure fund.

“We face a stark choice right now: we can either begin work immediately on a six-year highway bill that uses revenues from international tax reform or we can choose a two-year bill paid for by cutting benefits to federal workers,” said Congressman Delaney. “The House has passed an extension that gives us the time we need to get a robust bipartisan six-year highway bill done. There is strong momentum in both parties for using international tax reform, a fiscally-responsible pro-growth approach that will create jobs and allow us to invest in our future. I’ve sat across the table from over 100 Republicans to talk about this approach and know the support is there. Let’s get this done.”

In 2013, Delaney first introduced this framework – combining international corporate tax reform and infrastructure – to Congress with the Partnership to Build America Act, which ended last session with over 40 Republican and 40 Democratic cosponsors.

The Infrastructure 2.0 Act (H.R. 625)

• Investing in 21st Century Infrastructure with 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) a new financing mechanism for transportation, water, energy, communications and education projects. Leveraged to $750 billion, AIF financing (loans, bond guarantees and equity) is available to state and local governments. American Infrastructure Fund was first proposed in Rep. Delaney’s bipartisan Partnership to Build America Act. 
    • $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 HTF 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.

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