Politics & Policy

Tax Reform Could Create Obstacles for Infrastructure Push

A recent Politico story suggests that the Trump administration may have some trouble convincing congressional Democrats to go along with an infrastructure plan. There are many reasons for this — some partisan, some policy. One of the major hang-ups could be the funding of this plan. The Trump administration is considering paying for this infrastructure plan with cuts to other domestic-spending initiatives, a proposal that repels many Democrats.

Early on in 2017, some on both sides of the aisle had proposed paying for an infrastructure plan through the repatriation of profits held abroad. Large American corporations have trillions of dollars parked overseas, and a repatriation measure could allow businesses to bring in these foreign profits at a reduced rate. The repatriation of these foreign assets would be an injection of revenue, which could be spent on a variety of proposals (including infrastructure).

However, the current effort at tax reform uses the repatriation of foreign profits as a way of offsetting tax cuts elsewhere in the legislation. How much revenue could be generated through repatriation remains up for dispute, and we won’t know for sure until congressional Republicans release their final plan. It could be a significant amount of money. The Joint Committee on Taxation, for instance, estimated that the Senate’s repatriation provisions could generate $298 billion in revenue over the next decade.

As the old adage goes, “To govern is to choose.” Republicans could have chosen to use repatriation revenue as a significant down-payment on infrastructure; instead, they decided to bundle it in with tax reform. But now their choices on how to fund infrastructure get harder.

Fred Bauer — Fred Bauer is a writer from New England. His work has been featured in numerous publications, including The Weekly Standard and The Daily Caller. He also blogs at ...