Road Builders pitch tax, rebate plan to fund six-year, $400 billion highway bill

As members and their customers approach the current federal surface transportation program’s May 31 funding sunset, the American Road and Transportation Builders Association has outlined a plan it believes could end the political impasse over how to cover Washington, D.C.’s share of state highway, bridge and transit capital projects—while seeding a $401 billion, six-year highway and mass transit capital investment bill.


“Getting Beyond Gridlock” weds a 15 cents-per-gallon federal gas and diesel motor fuels tax increase with a 100 percent offsetting federal tax rebate for middle and lower income Americans for six years. It would likewise provide sustainable, user-based funds—at inflation-adjusted levels—to support the federal surface transportation program for at least a decade. Under the plan, 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 or less would receive a $180 rebate. The association’s analysis shows the rebate would fully offset the gas tax increase for 94 percent of tax filers.

“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,” ARTBA President Pete Ruane said in announcing “Getting Beyond Gridlock.” “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 capital planning the nation needs.”

ARTBA has long maintained that an increase in user fees, specifically the federal motor fuels excise rate, is the most efficient way to resolve the Highway Trust Fund (HTF) cash flow problem—now about $15 billion per year—and raise revenue needed for expanded capital investments in freight mobility and traffic congestion relief over the next decade. That has also been the recommendation of two blue ribbon endeavors mandated by the Congress and the National Commission on Fiscal Responsibility and Reform (Simpson-Bowles) appointed by President Obama.

Ruane says it is up to the Senate Finance and House Ways & Means committees to figure out how to pay for the tax rebate. The association cites one possible mechanism that has been elevated over the past year in highway and transit funding discussion: A one-time federal repatriation transition tax. The Obama Administration has proposed using a 14 percent transition tax on, what it says, is up to $2 trillion of untaxed foreign earnings that U.S. companies have accumulated overseas to augment the existing HTF revenue stream and fund its $478 billion six-year transportation proposal.

As part of comprehensive tax reform outlined in 2014, former House Ways & Means Committee Chairman Dave Camp (R-Mich.) proposed raising $126.5 billion over 10 years through a repatriation transition tax for the HTF to fund an eight-year status quo surface transportation investment authorization. This year, Rep. John Delaney (D-Md.) has introduced legislation to use deemed repatriation at an 8.75 percent tax rate to generate an additional $120 billon to the HTF for six years. The ARTBA tax rebate proposal would require $103.3 billion over six years.

“Just using repatriation as a one-time, short-term patch for Highway Trust Fund investments does not address or resolve the fund’s underlying revenue stream problem,” Ruane explains, noting that after the repatriation “fix” period is over, “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. Our proposal provides an answer for those who believe Americans are not willing or able to invest another $90 a year to improve their mobility and help keep the cost of just about everything they buy down.”

In modeling its plan, ARTBA used the U.S. Energy Information Administration’s 2014 forecast for domestic motor fuel consumption and vehicle miles traveled over the next six years; Federal Highway Administration data on the volume of motor fuel taxed; U.S. Bureau of Labor Statistics inflation forecast; U.S. Census Bureau population projections; and, U.S. Treasury Department and Internal Revenue Service tax collection and filing data. A 15-cent motor fuels tax increase would generate an additional $27 billion per year for HTF investments.

The association’s model shows the “Gridlock” plan would end the eight-year HTF revenue crises cycle. With the additional revenue, the existing core highway and transit programs would keep pace with forecasted inflation. Given that the FHWA forecasts truck traffic will increase 56 percent through 2040, ARTBA recommends using a significant portion of the remaining newly generated user revenue—about $12 billion per year—to fund federal investments in multi-modal capital projects that upgrade the U.S. freight network and help reduce traffic congestion bottlenecks.

“Two years ago with MAP-21, Congress did its job and enacted significant highway and transit program reforms that help ensure, going forward, federal investments are strategic, data and performance driven, transparent and utilized with accountability,” Ruane observes. “MAP-21 also set the stage for a new strategic initiative to upgrade the U.S. freight network with capital projects that have national and regional significance. The only thing lacking was the funding to move forward. This plan provides it.”

The proposal, he adds, “gives the Congress additional time to fully explore, and if deemed appropriate and workable, transition to other user-related mechanisms that have been discussed for funding future transportation infrastructure investments—like dedicated energy development fees, per barrel or refinery fees, VMT [vehicle miles traveled] fees or Interstate tolling … Meanwhile, state programs and the mobility of U.S. businesses and all Americans won’t be held hostage to indecision in Washington.”

“We hope this is helpful to Congress and the Administration as they get serious about a real solution that doesn’t just dig out of the huge hole that has been created, but also starts making the bold capital investments necessary to help U.S. businesses and show Americans real results,” Ruane affirms. “If there is a better plan out there that puts the surface transportation program back on solid ground over the next 10 years with a sustainable growth trajectory, then let’s move on it now. The time for cogitating and fretting is over. The clock is ticking.”