Keep up with essential planning news and commentary, delivered to your inbox every Monday and Thursday.
Your IRA Account May 'Patch' the Highway Trust Fund
"With the clock ticking down to a cash flow crisis in the Highway Trust Fund this summer, Senate Finance Committee chairman Sen. Ron Wyden (D-Ore.) offered a $9 billion remedy Tuesday (June 24) that would sustain the fund through the end of December. Wyden’s committee will mark up his bill Thursday," writes Tom Curry of Roll Call.
The bill is known as the Preserving America's Transit and Highways Act (PATH) of 2014 [PDF]. Many experts believe that a "patch bill" is necessary as it is doubtful that a reauthorization bill, especially one based on a fuel tax increase, would pass before the midterm elections.
The most significant part of Wyden’s package for those who drive the nation’s highways was his $1.3 billion increase in taxes on heavy trucks. This provision would replace the current $550 annual limit on the highway use tax for vehicles over 75,000 pounds, with a $1,100 cap for vehicles over 97,000 pounds.
As one might imagine, the trucking industry would be less than pleased with this provision, but that wasn't immediately clear from the American Truckers Associations' reaction, captured by Eugene Mulero of Transport Topics:
“This spring, ATA’s members stepped forward with variety of options we believe Congress should be considering. While ATA supports numerous funding options, an increase in the fuel tax is well known to be the fairest, most reliable and efficient method of raising money for infrastructure investment,” said Sean McNally, spokesman for American Trucking Associations, adding that the group is evaluating Wyden's plan.
Not so reserved was Sen. Bob Corker (R-Tenn.), who has his own proposal (with Sen. Chris Murphy, D-Conn.) for a six-year reauthorization based on what ATA recommends: an increase in fuel taxes. Calling it a 'complete sham', he "signal(ed) the lack of GOP support for the legislation ahead of its June 26 committee consideration," according to Transport Topics.
Wyden's Republican counterpart in the Finance Committee, Sen. Orrin Hatch of Utah, "finds fault with Wyden's plan. Hatch said Wyden's proposal isn't bipartisan, despite weeks of negotiations," writes ENR's Tom Ichniowski.
The PATH Act would draw on five different revenue sources, with only one, the doubling of the heavy vehicle use tax, being a road user fee. The largest revenue source "would be a change in how inherited individual retirement accounts (IRAs) are paid out to heirs," writes Curry.
Wyden’s provision would require retirement savings accounts to be paid out within five years of the death of the account holder in most cases. That would raise $3.7 billion in revenue over 10 years, according to an estimate by the staff of the Joint Committee on Taxation.
As with MAP-21 and the nine or ten extensions of the prior 2005 transportation authorization bill, SAFETEA-LU, the PATH Act relies mostly on the general fund transfers to supply the bulk of the funding above revenues from fuel excise taxes, unchanged since 1993, to sustain federal highway and transit spending at current levels in the PATH Act.
States are already addressing the impending cut-off of federal transportation spending if Congress does not pass a "patch" or reauthorization bill soon.