Delaney Statement on DOT’s Grow America Plan

Delaney Statement on DOT’s Grow America Plan

Administration plan adopts Delaney funding solution to rebuild America, create jobs

WASHINGTON – March 30, 2015 – (RealEstateRama) — Today, the Department of Transportation (DOT) announced their Grow America Act, which increases federal support for infrastructure. The DOT proposes a six-year transportation bill funded by pro-growth international tax reform, the same solution first developed by Congressman John K. Delaney (MD-6). Absent Congressional action, the Highway Trust Fund will run out of money on May 31.

Delaney’s Infrastructure 2.0 Act, filed in January, funds the Highway Trust Fund for six years and creates a new American Infrastructure Fund with revenues from an 8.75% tax on existing overseas profits. The DOT plan uses a 14% rate.

“America’s aging infrastructure is a big problem that needs a big solution. We were pleased that the President adopted our infrastructure-repatriation framework in his budget and we are even more pleased today to see it animated in the DOT’s Grow America plan,” said Congressman Delaney. “With time running out on the Highway Trust Fund, pro-growth international tax reform is the funding solution we need. Rebuilding America’s infrastructure should be our top economic priority. New infrastructure projects will create good-paying middle-class jobs, make our businesses more competitive and improve public safety. Republicans and Democrats, Congress and the White House, should work together to get this done.”

A 2014 study by Standard and Poor’s found that every $1.3 billion invested in infrastructure creates 13,000 jobs and $2 billion in economic growth.  The Infrastructure 2.0 Act is modelled upon Delaney’s Partnership to Build America Act, which emerged as one of the most bipartisan pieces of legislation in Washington, ending 2014 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 
    • 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 is available to state and local governments.
      • $25 million pilot program to create regional infrastructure accelerators, similar to the West Coast Infrastructure Exchange
  • 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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