Obama Budget Proposes Tax On Corporate Foreign Earnings For Roads

President Barack Obama unveiled his annual budget Monday, which includes a proposition to tax corporate foreign earnings to fund the nation's roads.

Vox reports the proposal would levy a one-time tax on 14 percent of foreign earnings held by U.S. corporations, pulling in $238 billion to help supplement taxes collected at the pump. The collected taxes would then be distributed into road infrastructure projects at a rate of $79.7 billion per year over the next six years, totalling $478 billion.

Meanwhile, Sens. Rand Paul of Kentucky and Barbara Boxer of California have both offered a "repatriation holiday" to said corporations, giving the latter a tax rate of 6.75 percent over five years on foreign earnings brought back to the United States. The taxes would then go into those projects.

However, such holidays have been frowned upon by Obama over his two terms, warning that corporations would lobby Congress for more tax holidays; the Joint Committee on Taxation found such holidays would lose money over a decade despite the short-term gain.

Another option, proposed by Rep. John Delaney of Maryland, would tax corporate foreign earnings at a rate of 8.75 percent while ending deferrals. The bill would collect $170 billion to be spent on roads for six years.

Whatever happens, a decision would have to be made within the next few months. The U.S. Highway Trust Fund will go empty once again if nothing is done by May 31 of this year, forcing Congress to make do with the gas taxes collected. Since most people are driving less and using more fuel-efficient vehicles to get around these days, those taxes — which haven't been raised above 18.4 cents/gallon since 1993 — fall short of the $50 billion per year needed for infrastructure; the current rate is of collection is $34 billion/year.

Two options have been proposed to fix the main issue — increase the gas tax and then pegging it to inflation, or expand drilling on federal lands and collecting the royalties — but neither option is popular among most in the Beltway.

The post Obama Budget Proposes Tax On Corporate Foreign Earnings For Roads appeared first on The Truth About Cars.

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