Trump’s Plan to Tap Offshore Profit for Infrastructure Gains an Allyby and
House transportation chairman says ‘everything’s on the table’
President wants returned income to help pay for public works
President Donald Trump’s plan to use corporate profits returned from overseas to help finance nationwide improvements to roads, bridges, airports and other public works picked up an important supporter in the U.S. House: Representative Bill Shuster.
“The dollars are out there, so we get a piece of that,” Shuster, a Pennsylvania Republican who chairs the House Transportation and Infrastructure Committee, said in an interview. The process of returning corporate profit to the U.S., known as repatriation, can be one of the sources that helps generate funding for repairs and new construction, he said.
Trump has proposed spending $1 trillion during the next decade on U.S. infrastructure and wants to leverage more private-sector dollars. Gary Cohn, Trump’s chief economic adviser, said on Fox Business on Feb. 3 that the president wants to use proceeds from repatriation to help fund the improvements.
U.S. companies have an estimated $2.6 trillion in profits that they’ve earned overseas and are keeping there. Under federal tax law, offshore earnings aren’t taxable in the U.S. until companies decide to return the income to America. Trump and House Republicans have called for establishing a lower tax rate on those profits, easing their return to the U.S.
But there’s been less agreement about how to use the resulting tax revenue. Shuster said he expects “a lot” of it would be used to offset broader tax-rate cuts, as House Republican leaders have proposed. “What exactly is the funding, that’s what we’re going to try to figure out and debate and move,” Shuster said. “Everything’s going to be on the table.”
Democrats have said they’re willing to work with Trump on infrastructure, including in the Senate, where lawmakers have proposed spending $1 trillion during the next 10 years. Republican congressional leaders, however, are pushing for private investment to play a bigger role. Republican House Speaker Paul Ryan has said he would like to see $40 in private spending for every additional federal dollar.
Asked whether Ryan supports using repatriation for infrastructure, spokeswoman AshLee Strong said only that “congressional leaders will work with the Trump administration to craft a fiscally responsible infrastructure plan.”
Witnesses at the first hearing of the House Transportation and Infrastructure Committee last week, including FedEx Corp. Chairman and Chief Executive Officer Frederick Smith, said they don’t think additional private-sector funding will be enough to meet the nationwide need. They said additional federal spending, from a gas tax that hasn’t been increased since 1993 or other sources, must be included.
Shuster said a combination of additional federal spending and increased private investment will be needed but said he couldn’t provide the precise mix. Asked whether he’d support increasing the gas tax, Shuster didn’t rule it out as part of negotiations to get a final package.
“That is certainly a difficult thing to do,” he said. “It’s something we should look at and consider.”
One thing he can’t support: creating a federal infrastructure bank to provide funding for projects, Shuster said. Senate Democrats and Steve Mnuchin, Trump’s choice to be Treasury secretary, have floated that concept, but Shuster said he feared it would become “a boondoggle” in Washington.
It’s also important that whatever infrastructure package emerges be done in cooperation with U.S. states, Shuster said.
“You have to have the states’ buy-in to this infrastructure bill and what they want to do,” he said.
The chairman said he hopes the administration will work “hand-in-glove” with Congress on any infrastructure initiative. He said his understanding is that Trump’s first priority is repealing and replacing the Affordable Care Act, also called Obamacare. Next are proposals for a tax overhaul and the infrastructure program. The three initiatives could bleed together as they’re being pursued, such as using any tax revisions to help fund infrastructure, he said.
It’s also likely that infrastructure could help get Democrats to accept changes they may not want on taxes and health care, Shuster said.
“As we go through Obamacare and tax reform, for the Democrats, there’s some bitter pills that they may have to swallow,” Shuster said. “And the sweet chaser is infrastructure dollars.”