Yoho, Delaney, Davis Introduce Bipartisan Bills Using International Tax Reform to Rebuild America’s Infrastructure
Washington, D.C. – Congressman Ted S. Yoho (R-FL-3), Congressman Rodney Davis (R-IL-13), and Congressman John K. Delaney (D-MD-6) introduced a pair of bipartisan infrastructure bills using revenues from international tax reform to upgrade America’s infrastructure. Congressman Yoho and Congressman Delaney introduced The Infrastructure 2.0 Act, legislation that includes the AIF and provides additional long-term revenues to stabilize and expand the Highway Trust Fund. Congressman Delaney and Congressman Davis introduced The Partnership to Build America Act, legislation that creates a new American Infrastructure Fund (AIF) to finance state and local projects.
“Infrastructure 2.0 is a common sense bill that repatriates overseas profits at 8.75%, creates jobs, and improves our nation’s infrastructure,” said Congressman Yoho. “By bringing those profits home, in addition to funds already appropriated, it will bolster the Highway Trust Fund. Along with the Partnership to Build America Act, it will create a new investment bank for our towns and cities. This will allow them to leverage private funds to repair our neglected infrastructure. By doing this, we will be able to bring our crumbling infrastructure into the 21st century.”
“Our infrastructure solution delivers a triple bottom-line: it creates good-paying jobs, boosts our long-term economic competitiveness and improves the quality of life of millions of people,” said Congressman Delaney. “There is a lot of interest on both sides of the aisle in infrastructure and our solution bridges the partisan gap. Our broken tax code and our crumbling infrastructure are two problems that are dragging down productivity and economic growth and tackling these two problems at once would be completely transformative for our long-term trajectory. I’m proud to work with Congressman Davis and Congressman Yoho to rebuild America and build support on both sides of the aisle to get a smart bipartisan deal done.”
“If our country is going to invest in infrastructure and spur job creation, we need innovative, bipartisan funding solutions like this legislation that brings public and private entities together to leverage more investments,” said Congressman Davis. “Local governments in my district are always looking for opportunities to advance new projects and fix their infrastructure, but too often they come up short because of a lack of funding from Washington. I’m encouraged by President-elect Trump's interest in passing an infrastructure bill and reforming our tax code. I hope the Partnership to Build America Act will be part of it.”
The Infrastructure 2.0 Act – To Be Introduced by Rep. Delaney & Rep. Yoho
Building a World Class 21st Century Infrastructure with Revenue from Deemed Repatriation at 8.75% Tax Rate
- Under the Infrastructure 2.0 Act, existing overseas profits accumulated by U.S. multi-national corporations would be subject to a mandatory, one-time 8.75% tax, replacing deferral option and current rate of 35%.
- $120 billion to the Highway Trust Fund, enough to meet funding gap at increased levels for six years.
- $50 billion to capitalize the American Infrastructure Fund (AIF)
- $25 million pilot program to create regional infrastructure accelerators, similar to the West Coast Infrastructure Exchange
- This frees the estimated $2 trillion in overseas earnings to return to the United States, spurring private sector re-investment and growth.
Creating Long-term Highway Trust Fund Solvency and Policy Certainty
- The Infrastructure 2.0 Act provides six years of Highway Trust Fund solvency, providing immediate certainty to the private sector and policymakers.
- The legislation also establishes a bipartisan and bicameral commission that is tasked with developing a solution for permanent solvency of the Highway Trust Fund.
Building a Path for Broader Tax Reform
- The Infrastructure 2.0 Act creates an eighteen-month deadline for international tax reform.
- To encourage action, the legislation includes a forcing function: if reform is not enacted, a fallback international tax package to make U.S. business climate more competitive would be implemented.
- This pro-growth fallback reform package would end deferral, reduce anti-competitive over taxation, decrease taxes for companies paying fair rates abroad but increase taxes for companies in tax havens. This would eliminate the lock-out effect and allow for the free flow of profits back to the United States.
- Under this option, for Active Market Foreign Income, a company would pay a 12.25% tax to the U.S. on overseas profits if they are currently paying no tax and a 2% tax to the U.S. if they are already paying the OECD average of 25% abroad, with a sliding scale in-between.
The Partnership to Build America Act – To Be Introduced by Rep. Delaney & Rep. Davis
The American Infrastructure Fund
- The Partnership to Build America Act creates the American Infrastructure Fund (AIF) to provide financing to state and local governments for new infrastructure.
- Transportation, energy, communications, water and education projects are eligible to receive AIF financing. Local governments would apply directly to the AIF for support.
- To encourage public-private partnerships 35% of AIF supported projects must have at least 10% of their financing be private debt or equity.
- The AIF will be capitalized by $50 billion in infrastructure bond sales and leveraged at a 15:1 ratio to provide up to $750 billion in loans or guarantees.
Funded by an Infrastructure Bond Sale
- Rather than using appropriated funds out of the federal budget to establish the American Infrastructure Fund, the Partnership to Build America Act uses a bond sale.
- AIF bonds would have a 50-year term, pay a 1% fixed rate return and would not be guaranteed by the U.S. government. These bonds are not intended to be a good investment on their own and are transferable after purchase.
- To incentivize companies to purchase these bonds, U.S. companies would be allowed to repatriate a certain amount of their overseas earnings tax free for every $1.00 they invest in the bonds. This multiplier will be set by a “reverse Dutch auction” – which allows the market to set the rate, ensuring that enough funds are raised.
- Assuming a 1:4 ratio is set by the auction; a company will be able to repatriate $4.00 tax-free for every $1 in AIF bonds they purchase.