Offshore taxes keep coming up. Here's the latest idea: Take away tax incentives for companies that locate overseas. Use the savings to shore up our dwindling highway trust fund, according to legislation introduced by two senior House Democrats last week. Budget Committee ranking member Chris Van Hollen of Maryland and Ways and Means Committee ranking member Sander Levin of Michigan say their proposal would raise $19.5 billion over 10 years. That's not nearly enough to cover all the transportation costs that will be needed over that same time, but it would give lawmakers some breathing room to figure out a longer term solution.
Or, alternatively, how about new offshore tax breaks only for the companies who invest in infrastructure? Rep. John Delaney, D-Md., has been doggedly marketing his bill to incentivize companies to put their own money into a national infrastructure bank in exchange for repatriating some of their overseas cash tax free. His idea is basically a carrot, while Van Hollen and Levin's bill is more of a stick.
Either way, the tax scheme for companies that have placed some of their facilities or money in other countries is becoming a frequent legislative target, at least for Democrats. The latest twist is that now they want to put the savings into transportation. Republicans have traditionally balked at tweaking the overseas tax scheme. But tailoring the proposals to transportation may change things. It's becoming increasingly clear that the country is running out of options when it comes to dealing with the highway trust fund, which is approaching its last few weeks of solvency.
Finance Committee Chairman Ron Wyden, D-Ore., says that he wants "the most benign, agreeable offsets possible," according to Politico. But he's dreaming. He got some bad news last week from the Congressional Budget Office. It will take at least $8 billion just to finish out the year, according to CBO's analysts.
Wyden posed another, slightly provocative question to CBO. What about an itty bitty six-cent-per-gallon increase in the gas tax? Never mind that the idea is politically unpalatable. CBO says it only gets us halfway there, raising $4 billion.
So we're back to the offshore tax breaks. Cutting them definitely isn't agreeable to some, but it may be the least disagreeable option left.
For our insiders: Changing the offshore tax scheme has traditionally been a nonstarter with Republicans, but would linking the savings to infrastructure change that? Why does this issue keep coming up in the context of transportation? Can offshore tweaks be made outside of a major tax reform bill? Is there such thing as a "benign, agreeable" offset?
(Note: This is a moderated blog on transportation issues. Comments are approved on a case-by-case basis. Contact me if you want to be a regular commenter.)
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