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Kicking the Highway Trust Fund can

Tim Fitzsimons Jun 24, 2015
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The House of Representatives will hold a hearing Wednesday on a proposed a corporate tax holiday on money kept overseas as a way of refilling the drained coffers of the Highway Trust Fund. The plan would temporarily reduce the tax rate to get the money back to the U.S., then stash it away to pay for roads and bridges. 

The idea has support on both sides of the aisleBut that won’t fix the fund’s solvency problem. The reason for that is the 18 cents you pay the fund for every gallon you put into your car is the exact same amount you paid back in 1993, the last year it was raised. And 18 cents buys a lot less today than it did back then.

“For some reason, the gas tax is politically toxic in Washington,” says Rob Puentes, senior fellow at the Brookings Metropolitan Policy Program. Puentes says that might be because states have their own gas taxes — and a bunch of those were hiked just in the past year.

“In some ways, perhaps this whole idea of repatriation is easier than trying to define what the transportation program should be for the future,” Puentes says.

James Burnley, transportation secretary under Ronald Reagan, calls the repatriation idea a temporary fix.

Burnley says two federal commissions tasked with fixing the fund’s broken revenue stream have proposed the same permanent fix: a “vehicle miles traveled” tax.

“You tax based on how many miles a vehicle is driven each year. And you do that regardless the mode of power of the vehicle,” he says.

That, he says, is a good fix in a time of increasingly fuel efficient cars — if they use fuel at all. And it’s also a fix, he says, that isn’t being entertained by Congress.

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