American businesses have left the United States, with little incentive to bring back much needed jobs. Within the next week, President Obama will present his 2016 Spending Plan for fiscal year 2016. The total plan calls for $4 trillion in spending.
Part of this Spending Plan includes billions of dollars for much needed repairs to America’s highway and bridge infrastructure. The President’s Spending Plan on the infrastructure repairs includes $240 million dollars in gasoline taxes and another estimated $238 billion dollars to be collected from American businesses which have moved overseas.
According to the Federal Highway Administration, Office of Highway Policy Information, the Highway Trust fund currently collects an estimated $33 billion, annually, in gasoline taxes. A far cry short of the requested $240 billion dollars the President’s Spending Bill proposes. There are two ways to meet the $207 billion gap between reality and desired spending. Deficit spending, or raising the Gasoline Tax.
There is strong support in Congress, by both parties, in raising the Gasoline Tax while prices are low. Recently senior Senate Republicans have said they want to keep options open and that “nothing is off the table” when weighing the best mechanisms to pay to finance infrastructure projects. This includes raising the 18.4 cent per gallon gasoline tax, which has not been raised since 1993, and the 24.4 cents per gallon diesel fuel tax.
Senator Bob Corker (R-TN) is backing a proposal for a 12-cent-a-gallon increase in the gas tax over the next two years. “I just think that option is there, it’s clearly one of the options,” said Sen. Inhofe (R-OK), new chairman of the Senate Committee on Environment and Public Works. Senate Finance Chairman Orrin Hatch (R-UT) and Sen. John Thune (R-SD), the third-ranking Senate Republican, also said they were open to the possibility of raising the tax.
Democratic leaders in both chambers of Congress, meanwhile, declared last month that “now is the time” for an increase. Senator Barbara Boxer and House Minority Leader Nancy Pelosi, both California Democrats, have urged Congress to increase the tax or find other ways to better fund infrastructure projects. “If there’s ever going to be a time to raise the gas tax, the time when gas is so low is the time to do it,” Pelosi said in early January.
Both parties see low gas prices as an opportunity to put in place a measure which will not encourage economic growth, and will be detrimental to America when gasoline prices once again increase.
The plan to collect the other $240 billion dollars is corporate taxation on those American businesses which have moved operations overseas. These American businesses fled the shores of the United States to avoid the current 35 percent top tax rate for corporations in the United States, the highest among major economies. This tax rate serves as a disincentive to conduct business in the United States, pushing businesses to move production, and jobs, overseas, keeping their foreign earnings abroad and avoiding the U.S. tax.
The President’s Spending Plan calls for a reduction of the top corporate tax rate for company profits earned in the U.S. to 28 percent. A 14 percent tax rate would be taxed immediately on past foreign profits, with a 19 percent tax rate on current and future foreign profits, with companies getting a credit for foreign taxes paid. The tax would be due immediately. President Obama also wants to impose a fee U.S. financial companies with assets of more than $50 billion. By applying a still lower tax rate, and a fee on the highest earning American corporations, the President’s plan will only further drive American jobs, and earnings overseas.