Taxpayer's Tab: Highway Funding Bill Fills Potholes With Taxes

This week, NTU Foundation scored legislation concerning infrastructure funding, the latest developments in email privacy efforts, and the fiscal impact of a single agricultural program subsidy. In this week’s edition of The Taxpayer’s Tab, we’ll take a look at each of these bills and how they might impact federal spending. A complete list of the bills to date with cost estimates is available in this spreadsheet.

Most Expensive

The Bill: H.R. 625, the Infrastructure 2.0 Act

Cost Per Year: $22 billion ($110 billion over five years)

Every time you swipe your credit card to fill your car’s tank with gasoline, you pay a federal gas tax of 18 cents per gallon (24 cents if you buy diesel) that gets deposited into the Highway Trust Fund. The tax dollars are used to build, maintain, and repair the country’s vast network of interstate roads and mass transit systems (as well as squirrel sanctuaries and bike paths).

In recent years, though, the Fund has teetered on the brink of insolvency, with funding expected to run out by May 31 without legislative action. The gas tax brings in about $34 billion of revenue per year, but the cost to maintain federal transportation infrastructure is nearly $50 billion annually. The deficit is reinforced by what has been a positive development for American drivers: as cars become more fuel efficient, drivers can go further on a single tank of gas. That has led to lower gas tax revenue even as road usage remains high. The Congressional Budget Office (CBO) projects that under current law, the Highway Trust Fund will face a $168 billion shortfall by the end of the next decade.

While Congress has passed several short-term funding bills to temporarily address the problem, a comprehensive solution has yet to garner bipartisan support. Rather than looking for ways to restrain spending in alignment with available resources, the President, many in Congress, and outside interest groups are looking for ways to raise more revenues for the Trust Fund. Higher federal gas taxes would certainly provide more funding, but that option is politically unpopular. As an alternative, Congressman John Delaney (D-MD) has introduced H.R. 625, which would instead reform existing tax law – specifically, those related to international corporate earnings – in order to finance $170 billion worth of infrastructure projects.

Rep. Delaney’s Infrastructure 2.0 Act would institute a one-time, 8.75 percent tax on overseas profits held by U.S. multinational firms. As NTUF noted in a recent report, the U.S. corporate income tax rate is well above the average of other developed nations, which incentivizes multinational corporations to shift some of their profits to lower-tax jurisdictions overseas. 

Some estimates suggest nearly $1.9 trillion in such profits are held overseas. About $120 billion of the revenue from this new tax would go into the Highway Trust Fund over the next six years, and another $50 billion would be used to create a new American Infrastructure Fund dedicated to offering loans and guaranteed bonds to state and local governments’ infrastructure projects. H.R. 625 would also establish a $25 billion Regional Infrastructure Accelerator pilot program to help state and local agencies establish financing priorities and strategies for their infrastructure projects.

The $195 billion would, over the next six years, represent an average annual increase of $22 billion above the current $11 billion authorized in the most recent stopgap infrastructure bill. The White House also recently touted corporate tax revenue as a “reliable” source of funding for the $478 billion in projects the President has planned. His latest budget proposal includes a one-time 14 percent tax on corporate income held offshore to raise $268 billion.

The sponsor said in a press release that “the Infrastructure 2.0 Act is the new policy solution we need to break the legislative gridlock that’s created clogged highways, crowded runways and costly delays for entrepreneurs and workers. With a looming Highway Trust Fund crisis ahead of us, it is clear that we need a new answer.”

Snowden, currently in hiding in Putin’s Russia to avoid felony charges of espionage in the United States, is at the center of an international controversy after he leaked information regarding government surveillance programs conducted in the wake of the 9/11 attacks. The secretive programs were the subject of Congressional debate for months after their revelation, and continue to prompt discussion over how much – if any – access the government should have to citizens’ information.

One of the issues raised during the height of the controversy was whether large corporations, especially phone and internet providers, were knowingly providing the government with data concerning their users’ communications. Google, Facebook, Yahoo, and Microsoft all acknowledged that the government requires them to periodically turn over some of that data, and under current law, the government is legally authorized to access certain types of email and online content that are currently protected by decades-old rules.

Congressman Kevin Yoder (R-KS) has introduced a bill that he originally proposed in the previous Congress. H.R. 699 would prohibit electronic communications providers from knowingly handing over the contents of those communications – including email, text messages, and other digital content – to government entities. The Email Privacy Act would also require the government to obtain a warrant from a court before it can require a communications provider to turn over any data related to its users.

“The last time Congress updated our email privacy laws, we were two years removed from the release of the first Macintosh computer,” Rep. Yoder said in a press release. “It’s time Congress modernized these outdated statutes to ensure that the rights protected by the Fourth Amendment extend to Americans’ email correspondence and digital storage.”

In the 113^th Congress, the bill gained the support of over 200 Members in the House, but eventually stalled in committee. Rep. Yoder reintroduced the bill in early February, and it has garnered 244 cosponsors so far (including 89 Democrats and 155 Republicans). The Senate version of the bill, introduced by Senator Mike Lee (R-UT), has 12 cosponsors (including 13 Democrats and 7 Republicans).

The bill is not likely to require additional federal spending, as it is largely regulatory in nature.