John Delaney, a Democrat, represents Maryland’s 6th District in the U.S. House.
After years of standoffs, Congress faces another dangerous deadline this summer: the looming insolvency of the Highway Trust Fund, which funds roughly 90 percent of federal surface transportation projects in the United States. What’s different this time is that there is increased willingness on both sides of the aisle to adopt a bipartisan solution that would use the vast amount of U.S. cash overseas to finance new infrastructure investment.
In the past year, members of both parties in Washington have made significant progress toward a consensus recognizing that our corporate tax code is broken, that we still have a major jobs crisis and that our crumbling national infrastructure is in a state of emergency. What was once a fringe idea — finding a way to use the record levels of overseas capital to finance new projects in the United States — is now mainstream. The support is there; we just have to work out the details.
Without a congressional fix, thousands of construction projects across the country will go on hold by mid-summer. Bridge maintenance, highway expansion and road repairs from Maryland to California will cease, precisely at what should be the peak season for construction. The latest estimates from the Transportation Department show that the federal government will be unable to maintain our country’s roads and bridges by late July. The Highway Trust Fund has been underfunded because of an unwillingness to raise the gas tax and has been bled dry by years of congressional inaction; insolvency would endanger hundreds of thousands of middle-class jobs and put a tremendous strain on state and local governments.
Sadly, this is just the latest chapter in a decades-long decline in our national infrastructure, which the American Society of Civil Engineers rates a D+. But infrastructure isn’t the only area of governance that has been neglected. For years, comprehensive tax reform has eluded legislators. A lack of reform — particularly in international tax — has hurt our ability to compete in a global economy by keeping U.S. corporate cash overseas and reducing domestic investment, slowing economic growth. In the past year, however, Republicans and Democrats in the House and Senate have rallied around reshaping our tax code in a way that would allow us to rebuild our country.
Last year I introduced the Partnership to Build America Act, which addresses the problem of our D+ infrastructure and our failing international tax code in one step: In exchange for buying infrastructure bonds, multinational companies would be able to repatriate a portion of their overseas earnings — which is good for our economy — tax-free. These bonds would capitalize the American Infrastructure Fund, which could finance as much as $750 billion in new infrastructure projects without requiring newly appropriated funds. Importantly, that fund could also finance new school construction, as well as energy, water and communication upgrades — areas not addressed by the Highway Trust Fund.
Similarly, this year both the president’s budget and the comprehensive tax reform proposal by House Ways and Means Committee Chairman Dave Camp (R-Mich.) married tax reform with infrastructure investment.
Efforts at serious reform are laudable and have positioned the moderate majority to act. First evidence of this momentum is the Partnership to Build America Act, which has the support of 31 House Republicans and 31 House Democrats. In the Senate, seven Republicans, five Democrats and one independent — led by Sens. Michael F. Bennet (D) of Colorado and Roy Blunt (R) of Missouri — have signed on. The act is the most significant bipartisan economic legislation in Congress and proves that there is broad and deep support for creating paths for overseas earnings to flow back to the United States as part of increasing our investment in infrastructure.
Congress should seize this momentum and strike an even larger deal that reforms our international tax system and increases U.S. investment in infrastructure. Specifically, we should do three things. First, place a mandatory tax on all existing overseas earnings at a 10 percent rate, which can be paid over 10 years. Once paid, overseas earnings can flow freely back to the United States. Second, we should allocate 60 percent of the revenue generated from the mandatory tax toward prefunding the Highway Trust Fund shortfall for the next six years and 40 percent toward capitalizing the American Infrastructure Fund as described in the Partnership to Build America Act. Third, for all future earnings, we should adopt a modified territorial tax system with a minimum effective tax and strong enforcement standards for cost accounting.
Taken together, these actions would allow the federal government to continue funding transportation projects in the traditional way, without the threat of insolvency or job-killing project cancellations, and dramatically increase our nation’s overall investment in infrastructure. This would create jobs and improve competitiveness, as well as create a path for the nearly $2 trillion in U.S. corporate cash sitting overseas to be reinvested in our economy.
We have a bipartisan framework that would make our country more competitive, create jobs and enact much-needed reforms to the tax code. Let’s work together to get this done.