Hopes fade for using tax reform on infrastructure

Hope is fading on Capitol Hill that tax reform will be used to pay for President Trump’s $1 trillion infrastructure package.

The administration released a sweeping tax plan on Wednesday that does not include money to revitalize U.S. roads, bridges, airports or other public works.

The one-page proposal includes repatriation, or taxing corporate earnings stashed overseas at a lower rate when it returns to the U.S., but does not indicate what the revenue should be spent on.

Proponents of using repatriation as a funding tool for infrastructure are worried about the message that the White House is sending with the tax plan.

{mosads}“This isn’t a good sign… It’s a punch in the gut,” Rep. John Delaney (D-Md.) said in a telephone interview. “I think [Trump] has basically told people today he doesn’t want to do infrastructure.”

Delaney, who sponsors legislation to use repatriation to pay for transportation upgrades, has long argued that a massive infrastructure bill won’t get over the finish line in Congress unless it’s paired with tax reform.

Rep. Mark Meadows (R-N.C.), chairman of the ultraconservative House Freedom Caucus, has sponsored legislation in the past that would use repatriation to replenish the ailing Highway Trust Fund, among other things.

But he said Wednesday that he would not insist that Trump’s tax overhaul include infrastructure funding, though he still believes that transportation investments are critical.

“Probably giving more flexibility on the tax reform side of things is really where I am right now,” Meadows told reporters.

“Obviously, I think repatriation and the infrastructure side of things is critical, but that being said, if we lower taxes and we have a different revenue stream somewhere else, it’s not going to be one of those lines in the sand that I say, well, you’re using repatriation for tax reform and you’re not using it for infrastructure.”

Coming up with long-term funding solutions for infrastructure has long eluded Washington, but repatriation was viewed as one of the potential bipartisan options.

Rep. Bill Shuster (R-Pa.), chairman of the House Transportation and Infrastructure Committee, told The Hill on Wednesday he “didn’t expect there to be” money for infrastructure in Trump’s tax plan.

His counterpart in the Senate echoed a similar sentiment on Tuesday.

“I don’t expect it to be in that tomorrow,” Sen. John Thune (R-S.D.), chairman of the Commerce, Science and Transportation Committee, told reporters.

Thune has previously expressed support for coupling infrastructure investment with tax reform.

Trump has been floating the idea of linking the two initiatives together because he said infrastructure is “so popular” with members of Congress.

But the concept of pairing tax reform with infrastructure has divided conservatives.

Four economic advisers to Trump’s campaign have recommended that the president focus on a business tax cut bill this year that also includes funds for infrastructure in an effort to appeal to Democrats.

But other prominent conservatives, including Americans for Tax Reform President Grover Norquist, have warned that tying infrastructure and taxes together could make tax reform less pro-growth.

Thune told reporters Tuesday that the strategy of attracting Democrats with infrastructure investment might not work in this case. He predicted that there wouldn’t be many lawmakers on the other side of the aisle willing to support the administration’s effort to cut business and corporate tax rates.

“Doing infrastructure in a tax reform bill would be largely designed to attract Democrats to get on board,” Thune said. “And I just don’t know if there are going to be any Democrats that are available for support of a tax reform bill. We’ll see.”

Delaney acknowledged he would still have serious problems with Trump’s underlying tax proposal, even if it had set aside money for infrastructure.

But he added that the inclusion of infrastructure investment would have at least given transportation advocates a better starting off point in the negotiations.

Delaney hopes some of his Republican colleagues who co-sponsor repatriation legislation with him will loudly advocate for infrastructure in the tax debate.

Trump’s proposal is only designed to be the starting point of a major push to pass a comprehensive tax reform package this year, and it could see adjustments as lawmakers debate the issue on Capitol Hill.

But the measure is still expected to face major hurdles. If the tax plan struggles to move through Congress, Delaney said that repatriation could still be on the table for infrastructure.

“So maybe we’ll get another bite at the apple,” he said.