I know you will probably scream bloody murder at this suggestion but you have to admit it makes sense: Raise federal gasoline taxes to pay for desperately needed road and bridge construction and repairs.
Yes, it could be politically unpopular. But hey, President Obama doesn’t have to worry about getting reelected, so why did he dodge this oh-so-logical alternative and suggest taxing overseas profits of US based corporations instead?
As Sean Williams of Motley Fool explains:
Why go after corporate profits overseas, you wonder? Simple: The president and Congress need to find a way to address a budget shortfall in the U.S. Highway Trust Fund, which will be insolvent by May of this year if nothing is done. The Highway Trust Fund is funded by diesel and gasoline excise taxes, and it has been paying out more than it’s been bringing in for quite some time. It provides aid to states and cities in the form of federal money to be used for construction, reconstruction, and mass transit projects…
In other words, the new budget proposal wants to tax overseas corporate profits and use that revenue to help pay for infrastructure upgrades around the country.
If it were up to me, I would tax gasoline but not diesel. Drivers who rely on diesel include truckers and other blue-collar working stiffs, while gas guzzlers include the Cape Cod grandma who drives to California to visit Cousin Sarah, and the well-heeled retiree who enjoys a Sunday spin in his new Escalade.
It’s been a while since gas was as cheap as it is today. And it’s not likely to get more costly anytime soon. There’s an oil glut on the global market and with the shale oil and natural gas bonanza in America, I don’t expect it to go away in a hurry.
I bet you wouldn’t even notice a few extra cents added to the federal gas tax. The price at the pump is inflated by all kinds of taxes already.
Furthermore, taxing gas should appeal to environmentalists. A new carbon tax proposed by California Senate leader Darrell Steinberg would increase gas prices at the pump by 15 cents a gallon as a way to combat climate change, for example.
This Republican controlled Congress might object to higher gas taxes, of course. They promised their bosses to oppose any and all taxation. (Even though Republican John Thune, the new head of the Senate Transportation Committee,told Fox News recently he wouldn’t take a gas tax increase off the table.)
But the Republicans are even more likely to oppose the idea of charging corporations 14 percent on their overseas profits, which is what the Obama budget proposes.
President Obama is presenting his proposal as a tax cut. Williams points out that:
Obama’s proposal to tax current overseas profits being held outside the U.S. at 14% is a major tax break for corporations looking to bring money home. The normal repatriation tax rate is 35%!
And the President’s budget also includes reduction of the corporate tax from 35 to 28 percent.
But I doubt this will appease Congress. Their corporate masters will complain that a US tax on overseas profits would make them less competitive in global markets.
It’s a dubious plan anyway. Those multinationals already pay Uncle Sam little or no federal income tax. They hire smart lawyers and accountants with sharp pencils instead.
I suspect that collecting the expected tax revenue from overseas corporate profits would not be as easy as the President might think.