July 8, 2015 at 12:42 pm ET
Portman, Schumer Lay Out Partial Tax Overhaul Plan
Two top members of the Senate Finance Committee on Wednesday released plans for a partial overhaul of the nation’s business tax structure, though whether details can be finished in time to advance the proposal remains an open question.
The plan, offered by Sens. Rob Portman (R-Ohio) and Chuck Schumer (D-N.Y.), would institute a one-time transition charge on overseas corporate profits transferred into the U.S. That’s similar to proposals offered by former House Ways and Means Committee Chairman Dave Camp (R-Mich.) and the White House in President Obama’s fiscal year 2016 budget request.
The money generated by the one-time charge would be used to cover shortfalls in a multi-year transportation funding measure.
The Portman-Schumer deal outlines five principles they say are essential to an eventual international tax-system overhaul, but it does not offer specific policy proposals such as tax rate on repatriated income.
“I look forward to working with colleagues on both sides of the aisle to fill in the details in the coming weeks and months,” Schumer said in a statement. “These proposals would right the ship, provide a potential funding source for transportation reauthorization, and allow the United States to compete on a level playing field.”
Portman called the proposal “just the beginning of a process, not the end.”
The bipartisan duo doesn’t have a lot of time to fill in the gaps. Senate Democrats have demanded a long-term highway deal by the end of July, when current funding is set to expire if Congress doesn’t act.
A partial tax overhaul has been one of the most common proposals for a funding mechanism for the Highway Trust Fund. The highway program is currently funded by a federal gas tax — 18.4 cents per gallon — that hasn’t been raised since 1993.
Senate Finance Committee Chairman Orrin Hatch was critical of the one-time transition charge in the Portman-Schumer proposal.
“I told Sen. Schumer I’d look at their ideas,” Hatch (R-Utah) told reporters Wednesday on Capitol Hill. “However, I’m not very enthusiastic about using repatriation funds for highways. I think that’s bad policy.”
The proposal had a better reception in the House, where Ways and Means Committee Chairman Paul Ryan (R-Wis.) called it a “bold, bipartisan framework.”
But he dismissed the notion that repatriating corporate earnings could be done without a larger international tax overhaul, suggesting that proponents of a long-term highway deal may have to wait for all the details of a tax deal to fall into place before obtaining their funding mechanism.
“I’m also pleased that their plan recognizes that a one-time tax on the repatriation of earnings stuck abroad makes sense only in the context of the kind of broader structural changes that they have proposed,” Ryan said in a statement.