Time for Congress to Work Together on Deemed Repatriation Infrastructure Deal

Delaney’s bipartisan Infrastructure 2.0 Act funds six-year highway bill using tax reform

WASHINGTON, D.C. – July 16, 2015 – (RealEstateRama) — The House will consider a short-term extension to the Highway Trust Fund (HTF), providing funding through December 18, 2015. The HTF is the nation’s primary funding source for federal transportation projects and faces a long-term annual shortfall of $15 billion dollars. The HTF will expire at the end of July.

Congressman John K. Delaney’s bipartisan Infrastructure 2.0 Act (H.R. 625) uses revenues from international tax reform to fund a six-year highway bill and creates a new American Infrastructure Fund to finance additional state and local projects. Delaney’s leadership in building support for using international tax reform to rebuild infrastructure was profiled earlier this year in the Washington Post.

“The facts are right before our eyes: the clock is about to run out again and all the old answers aren’t viable anymore. Let’s pass what’s hopefully our last short-term patch and then immediately start hammering out a long-term bill that uses international corporate tax reform,” said Congressman Delaney. “Using deemed repatriation paired with broader reform to bring money back home for roads and bridges will require both parties to leave their ideological comfort zone, but it is absolutely the right thing to do for the country. I’ve met with over 100 Republicans and 100 Democrats, personally, to pitch this solution and I know that the support is there. We can get this done, let’s start today.”

In 2013, Delaney introduced this framework – combining international corporate tax reform and infrastructure – to Congress with the Partnership to Build America Act, which ended last session with over 40 Republican and 40 Democratic cosponsors.

 

The Infrastructure 2.0 Act (H.R. 625)

 

  • Investing in 21st Century Infrastructure with Deemed Repatriation at 8.75% Tax Rate 
    • Under the Infrastructure 2.0 Act, existing overseas profits accumulated by U.S. multi-national corporations would be subject to a mandatory, one-time 8.75% tax, replacing deferral option and current rate of 35%.
      • $120 billion to the Highway Trust Fund, enough to meet funding gap at increased levels for six years.
      • $50 billion to capitalize the American Infrastructure Fund (AIF) a new financing mechanism for transportation, water, energy, communications and education projects. Leveraged to $750 billion, AIF financing (loans, bond guarantees and equity) is available to state and local governments. American Infrastructure Fund was first proposed in Rep. Delaney’s bipartisan Partnership to Build America Act.
      • $25 million pilot program to create regional infrastructure accelerators, similar to the West Coast Infrastructure Exchange
  • This frees the estimated $2 trillion in overseas earnings to return to the United States, spurring private sector re-investment and growth.

 

  • Creating Long-term Highway Trust Fund Solvency and Policy Certainty 
    • The Infrastructure 2.0 Act provides six years of HTF solvency, providing immediate certainty to the private sector and policymakers.
    • The legislation also establishes a bipartisan and bicameral commission that is tasked with developing a solution for permanent solvency of the Highway Trust Fund.

 

  • Building a Path for Broader Tax Reform
    • The Infrastructure 2.0 Act creates an eighteen month deadline for international tax reform.
    • To encourage action, the legislation includes a forcing function: if reform is not enacted, a fallback international tax package to make U.S. business climate more competitive would be implemented.
      • This pro-growth fallback reform package would end deferral, reduce anti-competitive over taxation, decrease taxes for companies paying fair rates abroad but increase taxes for companies in tax havens. This would eliminate the lock-out effect and allow for the free flow of profits back to the United States.
      • Under this option, for Active Market Foreign Income, a company would pay a 12.25% tax to the U.S. on overseas profits if they are currently paying no tax and a 2% tax to the U.S. if they are already paying the OECD average of 25% abroad, with a sliding scale in-between.
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