Hillary Clinton’s web site boldly announces that the priority for the first 100 days of her administration would be to implement “biggest investment in American infrastructure in decades.” Funding for $275 billion program would come not from any new taxes but “corporate tax reform”. If you are thinking that means closing tax loopholes, it is in fact quite the opposite:
Clinton has said she would finance infrastructure spending through unspecified “business tax reform.” Incoming Senate Democratic Leader Chuck Schumer of New York said on CNBC Oct. 18 that the money would come from a lower tax rate on profits stashed overseas by U.S. corporations. Other Democrats close to the Clinton camp said they anticipate she would adopt the Schumer approach. The lower tax rate would produce a one-time bonanza as companies brought home an estimated $2.5 trillion stockpiled abroad.
Profits earned overseas are supposed to be taxed at the same 35% rate as domestic profits. Those overseas taxes are only applied when the revenues are repatriated to the US. Large companies like Apple and Microsoft have been keeping their stash overseas, while lobbying Congress to lower the tax rate. (Technically, most of these funds are already in US banks, so this is all a kind of financial fiction.) The lower tax would indeed be a bonanza for companies, as they would get a windfall in the billions — money that was supposed to be paid to the US Treasury.
As most readers know, the nation’s infrastructure deficit is the result of declining gas tax revenues. For two decades, Congress has refused to adjust the gas tax for inflation. The only reasonable solution to this problem is to return the gas-tax back to normal levels — and not by giving away billions in corporate tax breaks.