Want Transportation Funding? Close This Egregious Tax Loophole

Isaiah J. Poole

We’ve already written about the American pharmaceutical company that plans to merge with an Irish drug company so that it will have a way to shield its profits from U.S. taxes.

That company, Medtronic, would still be an American company and would still use American taxpayer-funded infrastructure to ship its goods and to get its workers to and from its facilities. But it would not be paying its share of the costs of that infrastructure.

Rep. Chris Van Hollen (D-Md.) wants to put an end to that.

In an interview with The Washington Post’s Greg Sargent, Van Hollen said that House Democrats are going to push legislation that would limit the ability of companies to avoid U.S. taxes through merging with a foreign entity and moving their headquarters abroad, linked to an authorization for continued funding of the Highway Trust Fund.

That fund is expected to run out of money within the next two months, thanks to Congress’ inability to agree on a long-term plan for funding road and public transportation projects at an adequate level, either by increasing the gasoline tax now used to fund such projects or through some alternative.

The loophole-closing proposal would raise $20 billion dollars over the next 10 years by merely increasing the threshold by which corporations can use foreign ownership to escape U.S. corporate taxes, from 20 percent of foreign ownership to 50 percent.

Dedicating that funding to the Highway Trust Fund “will accomplish two important goals through one legislative action,” Van Hollen is quoted as saying. “It will deter American companies from deserting U.S. taxpayers, and use the revenue to create jobs here at home.”

The Highway Trust Fund has been kept solvent before through patches from other revenue sources besides fuel taxes before, so this would be no different. What this proposal would do is dare House Republicans to choose keeping our transportation network inadequate and in disrepair so that corporations can keep doing corporate hook-ups with foreign companies that allow them to function as American companies without paying American taxes.

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