US corporate tax reform would risk highway fund

Significance

On July 15, the House of Representatives passed a short-term funding measure, against the wishes of many in the Senate. US infrastructure is facing a fiscal crunch. Taxes on gasoline have traditionally supported highway appropriations. However, eroding purchasing power and greater fuel efficiency means that about 30% of highway funding must be found from other sources, difficult in the current Congress. The present round of appropriations expires on July 31.

Impacts

• A corporate tax might provide a long-term resolution, but the pursuit of it would come at the cost of seeking more modest solutions.
• These would provide stability for a year or two, necessary for projects of long duration.
• If corporate tax reform is not completed before the end of 2015, it will probably not get done in a presidential election year.
• If Congress were to rely on the prospect of these taxes for the HTF, it might find itself in a similar position in a few months.