House Dems are planning to push a new proposal that will challenge Republicans with a simple question: Are they willing to block corporations from shipping billions in tax dollars overseas to help avert a transportation crisis that could cost the country hundreds of thousands of jobs?
The crisis in question is the pending insolvency of the Highway Trust Fund, a transportation and infrastructure fund paid for by gas taxes. The White House has warned that allowing it to run out of money by the end of the summer could cost the country 700,000 jobs and put untold numbers of infrastructure and transit projects on hold — which means a big battle is set for this summer over how to produce the money to avert the pending disaster.
I’m told House Dems — with the support of leader Nancy Pelosi — are set to propose a new way to pay for it: A bill that would attach continued funding for the trust fund to a proposal to raise $20 billion by restricting U.S. multinational corporations from lowering their taxes by moving headquarters abroad.
“This will accomplish two important goals through one legislative action,” Dem Rep. Chris Van Hollen, a leading party strategist who is planning to push the new measure, tells me. “It will deter American companies from deserting U.S. taxpayers, and use the revenue to create jobs here at home.”
The proposal to block corporations in this fashion is not in itself new. The idea, originally championed by Dem Rep. Sander Levin and Senator Carl Levin of Michigan, would block “corporate inversions,” in which a company can merge with an entity abroad and enjoy lower taxes, provided 20 percent of its shares are owned by the foreign company. The Levin proposal would raise the legal hurdle for companies looking to enjoy this loophole, requiring 50 percent ownership by the foreign entity, raising an estimated $19.5 billion in American tax revenues over the next decade.
The new idea Dems will float is to fuse this proposal to a bill paying into the Highway Trust Fund. The thinking: No one has come up with a credible way to pay to replenish it. House Republicans have floated the idea of paying for it by limiting Saturday mail delivery. Meanwhile, two Senators this week proposed raising the federal gas tax, but that’s likely a nonstarter.
At the same time, the proposal to block corporate inversions is also running into opposition from Republicans and some Senate Dems. So why not use the urgency of the pending Trust Fund insolvency — and the blow to the economy and jobs it would entail — to increase leverage to close this corporate loophole?
Some will dismiss the idea as a hopeless stunt, and it’s true the proposal very well may not go anywhere. Even with the need to replenish the Trust Fund, House Republicans may be unwilling to entertain it. But Van Hollen insisted some Republicans with projects in their states and districts might prove gettable. State governments are already scrambling to find money to fill the looming shortfalls.
“It’s crunch time,” Van Hollen said. “Members from both parties are hearing from their states that the uncertainty is already creating a slowdown in projects. We’re reaching out to Republicans who may see the merit in making sure the Trust Fund has what it needs by making it harder for American companies to desert the United States.”
“This combines two immediate actions critical to our economy,” Rep. Levin adds.
Dems will tie this to their broader message about helping the middle class while Republicans preserve an economic status quo that’s rigged for the wealthy — a message that unites the “Fair Shot” agenda of Senate Dem candidates with ongoing attacks on GOP candidates as tools of the Koch brothers.
“Leader Pelosi supports the proposal to close this special interest tax loophole to create jobs and make critical repairs and investments to roads and bridges,” Pelosi spokesperson Drew Hammill tells me. “The contrast made by this proposal is very clear: Democrats are working to build an economy that works for everyone, not just the wealthy few.”
The idea may also be a long shot because some Senate Dems — such as Finance Committee chair Ron Wyden — will only consider closing the loophole as part of broader tax reform. But Van Hollen says Dems will start by pushing it in the House, to test what kind of “coalition” can “gain traction,” challenging Republicans to oppose it.
“We think this could have legs,” Van Hollen said. “This will have support from the overwhelming majority of the public. I wouldn’t want to explain to constituents why I’m allowing a green light for American companies to turn their backs on American taxpayers, instead of extending transportation funding for another 18 months.”