U.S. House Makes the First Move on Extending the Highway Trust Fund
Wednesday, July 15, 2015
With its August recess looming, Congress needs to extend the Highway Act beyond its current July 31 expiration date. The House starts its consideration of H.R. 3038 today, which is an $8.1 billion plan to extend the highway program for five months until December 18.
At issue in any extension is how to pay for it with spending cuts and revenue increases. The biggest offset in the House bill is $3.1 billion in revenue from Transportation Security Administration (TSA) fees that the bill would dedicate to the Highway Trust Fund. Requiring estates to report the value of the property on the owners’ death will provide $1.5 billion more in taxes from estates that misstate that value to reduce estate taxes and later claim a higher value to reduce capital gains taxes. Allowing the IRS to investigate and reassess taxpayers for six, rather than three years, on tax shelters is projected to add another $1.2 billion. Another $1.8 billion is expected from more detailed reporting from lenders on mortgages.
The Senate Republicans are making a final effort to pass a longer extension. There is no agreement on funding for a multi-year extension, but the Senate still is looking at an 18 month extension, which would cost $26 billion and take the issue past the 2016 elections. Capturing the tax revenues by repatriating some of the $2 trillion in corporate assets overseas to finance infrastructure projects remains an appealing concept, but that concept will not turn into detailed legislation by July 31 and may entail a broader revamp of the international tax code.
The Democrats in both chambers continue to push for a six-year extension. In the Senate, the highway bill may well be tied to a reauthorization of the U.S. Export-Import Bank, which expired on July 1 for lack of Congressional action to extend it. The Democrats may agree to the five-month extension if the bill reauthorizes the bank.
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