Transportation Spending and Taxing Considered by Key Senate Committee

When Congress returns from the July 4 recess, they will have less than four weeks to pass and fund a transportation bill—be it for six years, as desired by transportation advocates, or less, as Senate Finance Committee Chair Orrin Hatch prefers.

2 minute read

June 30, 2015, 10:00 AM PDT

By Irvin Dawid

Alexander Bolton of The Hill looks at two six-year transportation bills the Finance Committee may consider and possible taxing options that have been rejected by key Republican leaders.

  • Senate Democratic leaders have called for a six-year, $478 billion transportation bill paid largely by taxing overseas corporate profits. They warn it would be "very hard" for them to accept another short-term extension of highway funds after having done so 33 times. 
  • A bipartisan group of senators, including Senate Environment and Public Works Committee Chairman Jim Inhofe (R-Okla.), and Sen. Barbara Boxer (Calif.), the ranking Democrat on the panel, have proposed a less ambition [sic] six-year, $275 billion highway bill [Drive Act]. But Inhofe and Boxer are leaving it up to the Finance Committee to find a way to pay for a $90 billion funding shortfall not covered by federal gasoline and diesel taxes.

It's that last point—covering a six-year shortfall, that concerns Sen. Orrin Hatch (R-Utah), chair of the Finance Committee. "We’re not willing to raise taxes," he said. "I’m willing to look at everything but we’re not going to raise taxes to get there."

He says a three- or four-year transportation bill is more realistic than the six-year proposals put forth by the president and Senate colleagues.

Paul Ryan (R-Wis.), chair of the House Ways and Means Committee, expressed the same last week. "So I want to make very clear: I’m against raising the gas tax. There’s not much happening in this economy to help it grow, but lower gas prices is one of them...So we are not raising gas taxes—plain and simple."

Bolton goes on to describe two taxing options that have been proposed:

  • [Democrats] want to pay for it by requiring U.S. corporations to repatriate overseas profits at a 14 percent tax rate, which would raise $238 billion in revenue, and tax future foreign earnings at 19 percent.
  •  Republican Sen. Bob Corker (Tenn.) has called for increasing federal taxes on gasoline and diesel by 12 cents over two years and indexing it to inflation. Inhofe and Senate Commerce Committee Chairman John Thune (R-S.D.) have not ruled out increasing the gas tax.

The problem is that both repatriation and gas taxes are opposed by the key Republican leadership, though more Republicans seem willing to consider some version of the former. The Republican aversion to tax increases, though, will have to be weighed against demands by state governments and industry groups to find funds to ensure that current road and bridge construction projects are not discontinued due to cutoff of federal payments.

Sunday, June 28, 2015 in The Hill

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