A proposal to radically change the way America funds its infrastructure received mixed reviews from conservative analysts, though most agreed it would be preferable to the current system.
At an event hosted by the American Enterprise Institute on Tuesday, Democratic Rep. John Delaney claimed that his plan “brings together two fundamentally sound ideas from both sides of the aisle: fixing the highway funding shortfall and bringing cash back from overseas.”
The Infrastructure 2.0 Act, Delaney explained, would create a $50 billion, privately financed American Infrastructure Fund (AIF), “whose sole purpose is to provide funding for states,” and is not subject to federal control or credit guarantees. (RELATED: Mike Lee Would Send Highway Funds to the States)
“The AIF, by charter, would only be able to make quantitative decisions employing cost-benefit analysis,” he said, seeking to allay concerns that the agency would promote wasteful projects like the “bridge to nowhere.”
In addition, the bill would “allocate $120 billion to shore up the Highway Trust Fund (HTF) for six years,” ending the current cycle of replenishing the HTF every few months with revenues from the general fund.
Funding for the plan would come from repatriation of overseas corporate earnings, but unlike many other repatriation proposals circulating in Congress, Delaney’s proposal would permanently end double-taxation of foreign earnings.
Currently, he noted, “cash sits overseas because of a flaw in our corporate tax policy,” namely that firms can “defer” the taxes they owe on foreign earnings as long as they do not bring those earnings back to the U.S.
Infrastructure 2.0 would “take away companies’ ability to defer, but also give them a massive tax break,” applying a rate of 8.75 percent on existing overseas cash, rather than the current rate of 35 percent. (RELATED: Repatriation Holiday Won’t Fix Highway Funding Shortfall, Critics Say)
AEI scholar Alex Brill agreed with Delaney that, “we can’t stay the course of tapping into the general fund every few months” to replenish the HTF, as well as that, “we shouldn’t tax foreign earnings,” but was skeptical that Infrastructure 2.0 is the best way to accomplish those goals.
“If we think we should spend more on infrastructure, we have to consider the mechanism,” Brill said, and “we shouldn’t be looking at income earned abroad for infrastructure funding.”
Richard Geddes, director of the Infrastructure Policy Program at Cornell University, argued that in order to “create a reliable funding source for operation and maintenance” of America’s infrastructure, we should consider transitioning from the gas tax to a “mileage-based user fee” implemented at the state level.
Geddes pointed out that infrastructure funding “can only come from user fees or tax revenue,” and said that, “Delaney’s proposal secures funding through taxes.” MBUF’s, in contrast, “would allow us to set a market price for infrastructure” that reflects its true value to consumers.
Former Republican Sen. Steve Symms, conversely, said “I loved the congressman’s remarks,” and speculated that, “most people would tend to support [his proposal].” (RELATED: Conservatives Slam Short-Term Fix to Highway Funding)
“We need a way to transition [from the current system],” Symms said, but noted that, “libertarians will go nuts” if the government tries to track the number of miles they drive.
“The time has come for policymakers to bite the bullet,” he concluded, arguing that, “the sooner we fund our highways, the better off we will be.”
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