It was just announced that Sens. Rand Paul (R-Ky.) and Barbara Boxer (D-Calif.) would introduce the Invest in Transportation Act of 2015. The bill aims to offer an incentive to U.S. companies that are currently keeping $2 trillion in foreign earnings overseas to return some of these earnings. The repatriated earnings would then be subject to a favorable tax rate of 6.5 percent. While tax repatriation may be a good idea, it has nothing to do with infrastructure. Any tax revenue collected on returned overseas earnings should flow into the general treasury, not used to bail out the Highway Trust Fund.
This huge violation of the user-pays/user-benefits principle is surprising given Sen. Paul's reputation as a libertarian-leaning fiscal conservative. The user-pays principle is the bedrock of sound transportation policy, as it offers a number of advantages over general revenue finding, including:
- Fairness: Highway users benefit from the improvements their user fees generate.
- Proportionality: Users who drive more pay more. Users who impose disproportionate costs, such as heavy trucks, are charged more.
- Funding Predictability: Highway use and therefore highway user revenues do not fluctuate wildly in the short-run.
- Signaling Investment: Revenue roughly tracks use, which provides policy makers with an important signal as to how much infrastructure investment is needed to maintain a desired level of efficiency.
Sen. Paul joins a list of Republicans such as Sen. Roy Blunt (R-Mo.) who have endorsed similar unprincipled repatriation-based infrastructure funding in the past. Unfortunately, Sens. Paul and Blunt have good company in the current Congress. As it stands, the GOP's "conservative" solutions to Highway Trust Fund insolvency include raising the federal gas tax, a tax repatriation bailout, and creating a dangerous new non-user "drilling for roads" revenue stream. There is not even discussion of reducing outlays from the Highway Trust Fund to meet projected revenues. In fact, the last time the Republican-controlled House of Representatives was able to vote on a non-binding motion to instruct that simply stated Congress would not spend more surface transportation money than it was projected to collect in user taxes, it received just 82 votes. No, every serious proposal from congressional Republicans involves bailouts, bailouts, and more bailouts.
Meanwhile, President Obama has endorsed expanded highway tolling and leveling the financing playing field for public-private partnerships, two important measures long supported by free-market conservatives and libertarians. Will Congress's self-described fiscal conservatives embrace markets, spending restraint, and federalism, or will they support road socialist policies that move them to the left of the Obama White House?