June 11, 2015

Yesterday, House Ways and Means Committee chairman Paul Ryan (R-WI) announced that his panel will hold a long-awaited hearing on the long-term revenue situation for the Highway Trust Fund. The hearing will be held on Wednesday, June 17 at 10:00 a.m. in the Ways and Means hearing room in 1100 Longworth.

(Ed. Note: In case we needed further proof that Ryan has been entirely focused on trade issues up until this point, the notice on the HTF hearing was not sent out until just after the final versions of the various trade bills were made public and a vote was scheduled in the House for this Friday.)

According to Ryan, “The roads and bridges that keep our economy moving rely on a highly unsustainable financing system. Solving this challenge for the long term will require us to think big, and I look forward to exploring new ideas to close the shortfall once and for all.” And Select Revenue Measures Subcommittee chairman Dave Reichert (R-WA) said that his subcommittee “will be examining whether we could finance a multi-year highway bill as we make our international tax system more competitive.”

Reichert’s comment is yet another sign that some kind of mandatory repatriation of overseas corporate profits at a lower-than-normal tax rate is under consideration as a “pay-for” to fill the revenue gap faced by the HTF. Ryan’s counterpart, Senate Finance Committee chairman Orrin Hatch (R-UT), is also said to be exploring repatriation as a pay-for, offsetting a large HTF transfer (enough to support a four- to six-year highway reauthorization bill) as well as permanent extension of a few expiring temporary tax provisions, possibly in July.

The growing realization that a mandatory repatriation of overseas corporate income is a real possibility has now prompted pushback from anti-tax groups. An article in POLITICO Pro yesterday evening quoted staff at Americans for Tax Reform (Grover Norquist’s group that keeps the books of the anti-tax pledge that most Republican legislators have signed) and the Heritage Foundation (now run by Tea Party stalwart Jim DeMint) as stating that any mandatory repatriation of corporate profits held overseas at any tax rate whatsoever amounts to a tax increase in violation of the ATR pledge. The thinking is that even though a mandatory repatriation, such as the President proposed, would tax repatriated income at a rate much lower than the normal 35 percent corporate income tax rate, under current law companies have the option of keeping the money overseas, tax-free, forever; and 14 percent is higher than zero percent.

House Republicans have moved legislation in violation of the ATR pledge to the floor before and will doubtless do so again. But a fight to conceptualize repatriation as a tax increase may add a grassroots level of opposition to a policy that is already opposed by the big businesses (as personified by the US Chamber of Commerce) that would be paying the tax. Corporations don’t want to repatriate their profits in the absence of wide-ranging corporate tax reform that lowers the top rate permanently to bring the U.S. more in line with peer nations.