ARTBA President & CEO Pete Ruane March 12 outlined for political reporters and construction industry trade press a new plan to grow federal highway and transit investment and end the eight-year cycle of Highway Trust Fund (HTF) revenue crises that have caused uncertainty and disruption of state transportation improvement programs.
The “Getting Beyond Gridlock” (GBG) plan would marry a permanent 15 cents-per-gallon increase in the federal gasoline and diesel motor fuels tax with a 100 percent offsetting tax rebate for middle and lower income Americans for six years. It would enable Congress to write and fund a $401 billion, six-year surface transportation program reauthorization bill.
“If our national leaders think they need to use budget gimmicks or ‘one-offs’ again to pass the surface transportation investment program the states need and the business community has been pleading for, then use those devices to provide a $90 tax rebate to middle and lower income tax filers to offset the cost to them of a 15 cent per gallon increase in the federal gas tax,” Ruane said in announcing the plan. “Don’t use them to just prop up the program for a few years. That won’t resolve the structural damage that’s been done to the Highway Trust Fund, nor will it allow states to do the long-range planning that the nation needs.”
Under GBG, a single tax filer with an Adjusted Gross Income (AGI) of $100,000 or less would receive a $90 per year tax rebate—the average annual cost to them of a 15 cent gas tax increase. Joint filers with an AGI of $200,000 would receive a $180 rebate. ARTBA’s analysis shows the rebate would completely offset the gas tax increase for 94 percent of American tax filers. Congress provided tax rebates of up to $600 for individual filers and $1,200 for joint filers in 2008. A similar rebate plan was enacted in 2001.
The rebate proposal would require $103.3 billion over six years. One possible mechanism to generate the resources to pay for the rebates is the proposal to generate tax revenue by requiring U.S.-based multinational corporations to bring home—or “repatriate”—overseas earnings by paying a reduced tax on those profits. Several current and former members of Congress as well as the Obama Administration have floated repatriation plans that would generate between $120 and $238 billion to temporarily stabilize the Highway Trust Fund.
Ruane noted the ARTBA plan improves on these proposals because “just using repatriation as a one-time short-term patch does not address or resolve the trust fund’s underlying revenue stream problem.” After the repatriation “fix” period is over, he said, “the trust fund’s cash flow problem not only returns, but will be worse than it is now, threatening another crash in the highway and transit investment program.”
Ruane also observed the additional gas tax cost over a year “is less than we all pay each month for cell phone service.” He added, “I submit the mobility we get from modest, individual contributions to transportation infrastructure improvements is an outstanding return on investment.”
A 15 cent motor fuels tax increase would generate an additional $27 billion per year for HTF investments. These resources would fill the projected $15 billion per year gap between existing trust fund revenues and current levels of highway/transit investment and enable Congress to increase investment in highway and transit capital improvements by an average of nearly $13 billion per year over the next six years. ARTBA is suggesting a significant portion of these additional resources be invested in multimodal capital projects that upgrade the U.S. freight network and help reduce traffic congestion bottlenecks on it.