Everyone agrees that we need to maintain and upgrade our infrastructure—crumbling roads, bridges, tunnels, city streets, airports, etc. Progressives are all for spending the enormous amount of money, and either letting taxpayers or future generations (of taxpayers) pay for it. While Conservatives would like to improve the infrastructure too, they are loathe to pay for it now, or to saddle our grandchildren with it.
The Republican Congress and Administration has just signed into law a new tax bill. Among other things, it provides a way for U.S. –based multinational corporations to bring back literally trillions of dollars of overseas profits. They have been left overseas until now as a way of legally avoiding a second layer of taxation by the U.S. governments, without an excessive tax burden. Although many Democrats agreed with at least these concepts in the bill, they did not vote for the overall tax bill.
Why not combine this recent event with the obvious need?
Suppose the government were to pass a bill which allowed a corporation who repatriated profits from abroad to use up to 30% of the funds to purchase a special new issue of government bonds which would pay them tax-free interest, and also provide an equal amount of tax credits for five years. Many corporations would snap up such an offering, which could provide some or all the financing necessary to rebuild our infrastructure. It would keep the government out of the capital markets, not causing distortions in them for massive new borrowing.
Next, someone will eventually have to repay the borrowings—that’s the way borrowing works. It either has to be repaid by taxpayers, or by the infrastructure users, without intervention of the tooth fairy. If the newly built facility were to come with toll collections for its use, the bonds could be issued as revenue bonds, where the tolls collected would go first to paying interest and principal on the debt. Use of new, automated toll collection, like EZ Pass, would prevent bottlenecks and the need for toll stations. Commercial truckers could pay a new tax based on facility usage—and yes, they would raise their prices, but again, the users would be paying, not general taxpayers.
How do we know that the states would use the money wisely, and not just rush to get money for construction projects? Some discipline could be maintained by making the states that got the money be the guarantors of the bonds, should the revenues generated from tolls prove insufficient for debt service. That would also get the borrowing off the Federal government books, thus not increasing the deficit, and transferring it to the states who would have incentive to only request funds for broadly used facilities.
Of course we would see squabbling and infighting over who got the funds for what project. That’s what Congress does. But with the various using states absorbing the guarantee for repayment, some sense would be injected into the process and requests. This appears to be a project and solution that most in America would back, and is a Centrist solution to a problem, taking advantage of current opportunities to marry them to current problems.