The outline of a proposal to re-write the nation’s tax code released June 24 by House Ways & Means Committee Chairman Kevin Brady (R-Texas) does not include provisions to permanently stabilize the Highway Trust Fund (HTF). Brady essentially acknowledged this at a Washington, D.C., event earlier this year, but since then House Highways & Transit Subcommittee Chairman Sam Graves (R-Mo.) and Ranking Member Eleanor Holmes Norton (D-D.C.) and 128 other House members urged Brady in a May 25 letter to make fixing the trust fund a priority in any tax reform proposal. The letter, signed by 56 Republicans and 74 Democrats, told Brady: “Simply put, if the HTF is unable to make payments to states, projects will be halted, improvements to road safety and congestion will be jeopardized, and America’s infrastructure will fall behind the rest of the world. This would put our businesses – and the American worker – at a significant disadvantage in the competitive global economy.” While the Brady proposal misses an opportunity to put forward a permanent solution to support and grow future federal highway and public transportation investments, it includes a number of ARTBA-supported tax reforms. Specifically, the House GOP plan calls for:
- Eliminating the estate tax;
- Allowing full and immediate write offs for business investment;
- Cutting taxes on sole proprietorships, partnerships, limited liability companies and S corporations to 25 percent; and
- Reducing the corporate tax rate to 20 percent.
It is also worth noting the plan recommends reforming the taxation of overseas earnings by U.S.-based multinational corporations to no longer impose taxes on profits outside of the U.S. and encourages companies to bring home income held overseas. The Obama Administration, Republicans, and Democrats in Congress as a mechanism to generate new resources for infrastructure investment have identified this “repatriation” of prior overseas earnings. Under the House GOP plan, it appears revenues from repatriation would be used to offset reductions in the corporate tax rate. Ways & Means Committee documents describing the plan state that it is not legislation at this point, but the beginning of a conversation. Furthermore, House Republican leaders have been clear about their intent to put forward policy ideas to define the party in advance of the November elections as opposed to trying to pass legislation. ARTBA will continue to make sure all members hear about the need for a permanent HTF solution as any tax reform conversation goes forward.