Obama 2016 Budget: New Tax to Yield $238 Billion for Highway Trust Fund
"The White House will propose taxing the foreign profits of American-based companies in order to fund infrastructure programs, a White House official confirmed on Sunday," writes The Hill's Bernie Becker. "Those taxes will be included in the president’s 2016 fiscal year budget, which will be announced on Monday (Feb. 02)."
The tax is an integral part of the president's $4 trillion spending plan for fiscal 2016, according to Fox News.
One tax will collect "14 percent on the roughly $2 trillion that U.S. multinational corporations have staffed offshore and would be imposed whether companies bring the profits to the U.S. [a process known as repatriation] or not," writes Becker
The proposal is not new. The president first mentioned it in the release last April of his $302 billion Grow America Act, his four-year infrastructure package that Congress has yet to act on. We had tagged the tax under "business tax reform."
It was also proposed by former House Ways and Means Chair Dave Camp, now retired. It too was not acted upon. A repatriation tax is also the basis of the forthcoming Invest in Transportation Act announced on January 29 by Sen. Rand Paul (R-Ky.) and Sen. Barbara Boxer (D-Calif.).
According to Reuters, though, "Republicans were skeptical of the plan on Sunday," referring to the total tax package, not necessarily the specific 14 percent offshore funds tax.
The one-time tax "would mean that companies have to pay U.S. tax right now on the $2 trillion they already have overseas, rather than being able to delay paying any U.S. tax indefinitely," a White House official said.
"Unlike a voluntary repatriation holiday [preferred by business], which the president opposes and which would lose revenue, the president’s proposed transition tax is a one-time, mandatory tax on previously untaxed foreign earnings, regardless of whether the earnings are repatriated."
The gas tax would provide an additional $240 billion over six years, making for a total $478 contribution to the Highway Trust Fund, which becomes insolvent at the end of May when the current patch funding bill expires.