Raising Taxes Not A Long-Term Solution for Highway Trust Fund
July 6, 2015
This article originally appeared in The Hill on June 25, 2015
With the Highway Trust Fund set to run out of money yet again in the coming weeks, members of Congress have focused their efforts around various ideas to provide a sustainable, long-term solution to the funding shortfall. At least some of them have.
A fix to the Fund will not be easy. And the failure of Congress to work toward a real solution has led some politicians to resort to their age-old answer of raising taxes. This is a monumentally bad idea because in addition to the 18.4 cents per gallon that consumers are paying in federal gas taxes, the average state gas tax is 20 cents per gallon, making the total taxes paid at the gas pump to be 38 cents per gallon.
Another option is to use taxes received from repatriated funds (money brought back into the country by corporations). Whether it’s raising the gas tax or using repatriated tax revenue, attempts to shore up the Fund by shifting money from other budgets will not be a long term solution. And, these gimmicks will not solve transportation problems.
This shortsighted fix of repatriation fails to address the anti-competitive nature of the U.S. tax code that encourages companies to keep foreign profits abroad in the first place. Its implementation will only result in future Congressional scrambling for more infrastructure funding in the future.
If the country is serious about improving the nation’s infrastructure, our leaders need to work towards a thorough, long-term, pro-growth solution. But instead, some members of Congress have proposed this one-time repatriation tax, essentially double-taxing the income American companies make overseas.
Many American businesses are re-investing their profits overseas because the U.S. corporate tax code is incredibly complex and the United States has the highest corporate tax rate (39 percent) in the developed world. The U.S. code takes away business’s competitive advantages, further incentivizing companies to keep foreign profits overseas where tax rates are substantially lower.
Now is not the time to impose another anti-competitive tax burden on the nation’s businesses for the sake of the short term viability of the Highway Trust Fund. Congress needs to come up with a long-term, pro-growth solution to improve our infrastructure. Initially, Congress should focus on setting the corporate tax rate to a competitive twenty five percent. Revising the business tax code will encourage businesses to invest in America and, in the long-term, increase our tax revenues, providing additional resources for things like crumbling roads and bridges.
At the end of July, the Highway Trust Fund could run out of money for the sixth time. How many more times are our leaders going to apply a temporary fix to a problem that needs a real pro-growth solution?
Enough is enough. It’s time for Congress to stop kicking the can down the road. Repatriation is not a long-term solution for the highway trust fund’s financial problems and it certainly isn’t what American businesses need from tax reform.