Our Broken Tax Code Shouldn't Fix Our Broken Infrastructure

A crowning achievement of President Dwight D. Eisenhower’s legacy was the 47,000 mile Interstate Highway System.  The system revolutionized America’s economic and social structure.  As Eisenhower noted, the 1956 Highway Revenue Act united a country that existed as an “alliance of many separate parts” and “its impact on the economy…was beyond calculation.”  Even though there have been some bumps in the road with congressional earmarking and other questionable policy decisions, for more than sixty years the Highway Trust Fund has financed the maintenance and repair of America’s highways.  The trust fund is set to run out of money by August, not good news for the nation’s infrastructure.

The current 18.4-cent-per-gallon gasoline tax and 24.4-cent-per-gallon diesel fuel tax will no longer sustain the Fund, which has a projected shortfall of $172 billion over the next ten years.  If the Fund fails, more than 700,000 Americans will lose jobs, more than 112,000 projects will stop, and our nation’s deteriorating infrastructure will continue to crumble.

Transportation Secretary Anthony Foxx proposes, along with President Obama in the Grow Americas Job Act, to use “pro-growth business tax reform to provide” a stop-gap that will total $150 billion, allowing the Fund to stagger along on life-support.  According to Secretary Foxx, “A one-time tax change related to U.S. companies’ overseas earnings is the most feasible way to provide the additional funding needed to rebuild aging highways and mass transit systems.” He explains his idea as an effort to take “some of the untaxed earnings that are overseas and plow some of that into infrastructure.”

Attracting corporate investment to the United States to spur GDP growth as a means to fund our nation’s infrastructure is important.  However, Secretary Foxx’s plan will simply shift the burden onto American corporations in an attempt to alleviate ill-managed government spending—a short-term crisis-reducing effort that does not truly address the underlying issues.  What America really needs is comprehensive corporate tax reform that will attract domestic investment, achieving Secretary Foxx’s stated aims, but also using a strategy that helps to grow and strengthen the national economy over the long-term.

A reduction of the corporate tax rate would eliminate the problems with America’s aging infrastructure.  Currently, our outdated corporate tax code results in billions of dollars in lost revenue.  Specifically, America’s business tax code increases the burden on companies and individuals who are inflexible in their locations and limits domestic capital and investment; it shrinks the US tax base, and halts US job creation.  This is money that, if re-integrated into the American economy, could easily fund the Highway Trust Fund and much more.

Secretary Foxx’s recognition of the problem posed by our outdated corporate tax structure is one step in the right direction, but Secretary Foxx’s solution, unfortunately, would be taking two steps back.  What we need is more comprehensive reform and a bi-partisan effort to truly overhaul the tax system.  Not only would the pockets of everyday Americans benefit but also this would be an issue around which a bi-partisan consensus could coalesce.  By making strategic decisions to restructure the corporate tax structure, we create an environment that will stand as a testament to President Dwight Eisenhower’s legacy—a legacy America deserves.

Using corporate tax revenue to fund transportation is a gimmick that must be given the red light immediately.