A bipartisan group of lawmakers thinks the key to uniting Republicans and Democrats around a massive infrastructure package is coupling it with a sweetener for conservatives: tax reform.
Reps. John Delaney (D-Md.), Ted Yoho (R-Fla.) and Rodney Davis (R-Ill.) have pushed the concept for years. But now the group — who came to Congress together in 2013 — might have their best shot yet.
“These two ideas we’re working on are better poised to become a reality than the entire time we’ve served together over the past four and a half years,” Davis said in a sit-down with reporters this week. “President Trump has brought the debate to the forefront.”
{mosads}Trump, who is assembling a $1 trillion infrastructure package, signaled for the first time in a recent White House meeting that he is considering using a “repatriation” tax holiday to pay for part of his plan. The process involves taxing corporate earnings that are being stored abroad when that money returns to the U.S.
Delaney, Yoho and Davis are seizing on that momentum and renewing their effort to link international tax reform with infrastructure spending.
The group introduced two bills this week aimed at tapping into cash overseas that would use the money to upgrade U.S. roads, bridges and other public works. An estimated $2 trillion in earnings is stashed overseas, they say.
One measure sponsored by Delaney and Davis would establish a $50 billion infrastructure bank to finance local transportation, energy, water and education projects.
The bank, which would put an emphasis on public-private partnerships, would be funded through the sale of 50-year bonds to U.S. corporations that want to repatriate overseas earnings. In turn, the companies would be allowed to bring a certain amount of overseas earnings back to the U.S. with no federal tax liability for every $1 invested in the bonds.
The other bill, from Delaney and Yoho, would allow U.S. multinational corporations to repatriate earnings at a mandatory, one-time tax of 8.75 percent, a discount on the current 35 percent rate and deferral option.
Those revenues would be used to improve the nation’s infrastructure, with an estimated $120 billion going to the Highway Trust Fund, $50 billion going to an infrastructure bank and $25 million going to a pilot program focused on rural infrastructure.
The legislation also sets an 18-month deadline for international tax reform and creates a panel to explore long-term funding solutions for financing the ailing Highway Trust Fund.
“It’s giving each side something they really cared about for a while,” Delaney said. “Democrats have really made infrastructure one of our top priorities. My colleagues on the other side of the aisle have made fixing this broken international tax system a priority.”
The lawmakers make strange bedfellows. Yoho is a member of the ultraconservative House Freedom Caucus, Davis is a rural Republican who supports medical marijuana and lifting Cuba restrictions and Delaney is a wealthy former banker who represents part of the Washington, D.C., suburbs.
But the lawmakers, who traded both barbs and compliments during their sit-down with reporters during an otherwise tense and partisan week on Capitol Hill focused on healthcare, say they share the common goal of boosting the economy through infrastructure investment.
The trio believes their legislation can bridge the partisan gap in Congress.
Fiscal conservatives have been reluctant to back massive federal spending on transportation, especially if it blows a massive hole in the deficit. But tax reform may be one way to get them on board.
“Infrastructure was something I campaigned on as a Republican, which there wasn’t exactly a hot bed of conservative support for,” Davis said. “It’s going to take Republicans like me and Democrats like John to be able to come together and understand how do we actually pay for those projects.”
Yoho said the Trump administration, which is collecting funding ideas as it begins to craft a comprehensive infrastructure bill, appears to have some appetite for the idea.
The chairmen of the House and Senate Transportation committees, Rep. Bill Shuster (R-Pa.) and Sen. John Thune (R-S.D.), respectively, have also signaled interest in using repatriation to pay for the plan.
“I’ve shared this with [Vice President] Mike Pence and said these are the things we have,” Yoho said. “And Mike Pence says, ‘You know what, you’ve brought this up to me before. We’re seriously looking at it.’”
“So I feel we’re making headway on it,” Yoho added.
But even though Trump and Congress have both signaled interest in tackling tax reform and infrastructure this year, that doesn’t mean they will dovetail together.
For one thing, lawmakers tasked with writing tax laws have been reluctant to commit to spending the cash from repatriation on infrastructure. Instead, they prefer to use that money to overhaul the tax code, and there are questions over whether there’s enough revenue to effectively accomplish both.
And Trump and leadership have both suggested that tax reform will come before infrastructure, which could spell trouble for the trio’s legislation if repatriation gets all used up.
“If you sequence these things, so you do tax reform first and infrastructure second … the chances of the people doing tax reform setting aside some money for some future infrastructure discussion are non-existent,” Delaney said. “Unless infrastructure has a seat at the table, it will be much harder.”