Trump’s Plan Needs Mechanism to Steer Money to Infrastructure
Andrew Harrer/Bloomberg News
Congressional Republicans have been reluctant to comment on — or even work on — legislation to deliver on President Donald Trump’s pledge to spend $1 trillion on infrastructure over 10 years.
Lawmakers say they’re waiting for the administration to provide details of a proposal that has raised more questions than it answered. Among the questions is how Trump would entice investors to put more than $150 billion in equity into infrastructure projects.
At the heart of Trump’s $1 trillion ambition — presented in an October paper by Trump advisers Wilbur Ross and Peter Navarro — is about $167 billion in equity capital. The document says Trump would encourage companies by offering an 82% tax break and it raises the prospect of what it calls “synergistic interaction” with a change in tax law to repatriate corporate profits held abroad. The equity would leverage additional debt to get to $1 trillion.
The staff of the Joint Committee on Taxation estimated in August 2016 that about $2.5 trillion in profits accumulated since 1986 are held abroad.
But companies that hold money abroad and could be enticed to repatriate that money under a new tax regime aren’t necessarily companies that are comfortable investing in infrastructure. Tax writers on Capitol Hill say the repatriation element would require the federal government to serve as a vehicle for infrastructure investment.
“I’m not quite sure how it would work,” Senate Finance Chairman Orrin G. Hatch, (R-Utah), said. “The federal government would have to take that over.”
Kevin Brady, (R-Texas), chairman of the House Ways and Means Committee, said it is “premature” to discuss a specific use of repatriated money other than as part of a tax overhaul.
In the House Republican tax plan, “we took those dollars and plowed them back into a lower rate and a more competitive tax system, which is where I believe it belongs,” Brady said. “Others would like to use it on infrastructure and have asked to have those discussions, so we certainly will, through the process. None of that has been discussed to my knowledge.”
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|By Jacob Fischler|
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