Statement by John Olivieri, National Campaign Director for 21st Century Transportation at the United States Public Interest Research Group on this week’s House Plan to Fund the Highway Trust Fund Through the End of the Year
“The new plan put forward by House leaders is not sustainable and is not a long-term solution. It counts savings from measures over as many as 10 years for 5 months of supplemental transportation funding, and in the case of the TSA, the new plan is little more than an accounting maneuver. This is no way to sustainably fund our nation’s transportation system.
“The House plan is still preferable over proposals to generate funding through discounted repatriation of offshore profits for which U.S. companies have deferred paying taxes. Corporate tax discounts are even more detrimental than just another budget gimmick. They actually cause the budget to lose money, while eroding the integrity of our tax system and unjustly rewarding corporations that have most aggressively exploited offshore tax havens.
“The official Congressional scorekeeper, the Joint Committee on Taxation, found that past corporate tax holiday proposals actually cost as much as $118 billion over ten years, as companies shed their fiscal obligations at a steep discount and then use repatriated funds to purchase their own stock to boost the price. This process therefore serves to incentivize more tax dodging, leading to even higher cost projections in the future.
“Another study by the Joint Committee on Taxation found that a majority of funds supposedly held ‘offshore’ are actually already kept in U.S. banks, allowing them to benefit from the U.S. financial system without paying the taxes that help support it.
“The U.S. loses approximately $90 billion every year from offshore tax dodging. IRS data show that the majority of profits held offshore by U.S. companies are in a dozen jurisdictions considered as tax havens. If Congress wants to reclaim some of that cash, it should close, not expand, the tax loopholes that encourage companies to indefinitely defer paying taxes on those profits and to use accounting tricks to characterize profits earned in the United States as offshore profits.
“House proposals at least encourage greater tax compliance, which is better than proposals to give tax breaks to tax dodgers which discourage future compliance.
“While better than counterproductive corporate tax discount measures, House proposals to cobble together a handful of nickel and dime offsets and accounting gimmicks are still no way to fund our national transportation system. America needs transportation funding that is sustainable over the long-term and which is preferably raised in a way that encourages more beneficial transportation behavior. With over 30 thousand structurally deficient bridges and scores of needed transportation projects stuck on the drawing board, the country needs adequate investment in transportation. Substantial savings can be generated by halting unnecessary plans for new and expanded highways that are based on questionable assumptions of an endless driving boom.”
More information on the cost to U.S. taxpayers when some corporations stash profits offshore can be read in the U.S. PIRG report, “Picking up the Tab: Average Citizens and Small Businesses Pay the Price for Offshore Tax Shelters.”