Paving Our Roads with Broken Promises: A Rotten Idea
by Scott Klinger, 7/23/2015
With a week to go before funding for our nation’s Highway Trust Fund runs out, the Senate is working feverishly to pass legislation that would set a clear path for job-creating infrastructure spending over the next several years.
Optimism rose early Monday when the outline of a six-year bipartisan bill crafted by Sens. Barbara Boxer (D-CA) and Mitch McConnell (R-KY) was revealed. The bill would provide three years of guaranteed funding, with the remaining three years to be worked out later. But by late afternoon that day, the bill had suffered its first setback, when eight Republicans joined all Senate Democrats to block the legislation from moving forward in a procedural vote.
At issue is the funding mechanism for highway funding. Unwilling to raise the gas tax, which has been frozen for 22 years (since the early years of the Clinton administration in 1993), Congress has taken to looking for spare change under congressional couches to pay the bill. Some of the $45 billion cost of the bill would come from extending Transportation Security Administration fees charged to travelers and by cutting the dividend rate paid to banks that own stock in the Federal Reserve System.
Of greater concern are proposed cuts to Social Security benefits and unemployment benefits, both of which are earned and paid for by America’s workers. It's amazing how contracts to CEOs must be honored, but contracts with working people can be thrown under the bus.
The bill calls for denying Social Security benefits to those with outstanding warrants for arrest. Proponents of this measure argue that we should not be providing public benefits to “fugitives.” They fail to list the “crimes” that can generate a warrant, including failing to show up for jury duty, failing to show up in court for a traffic ticket, or bouncing a check. While few would justify these behaviors as socially responsible, most Americans don’t think a jury scofflaw or unpaid traffic tickets should consign an offender to a life of poverty, cut off from Social Security payments they worked for decades to earn and on which they rely for a secure retirement.
A second revenue source would come from denying people on Social Security Disability Insurance the right to receive unemployment benefits. Proponents argue that if you receive disability benefits, you are “double-dipping” if you also receiving unemployment. But the Social Security disability program never intended for its beneficiaries to sit at home; in fact, our anti-discrimination laws explicitly require employers to make workplaces accessible to Americans with disabilities.
Social Security Disability Insurance is designed to give disabled Americans a little extra support to accommodate the financial implications that often come with disability (medications, wheelchairs, home health care assistance, etc.). Many disabled employees do work, and if they lose their jobs, they should receive unemployment benefits since both they and their employer paid for the benefit. Unemployment insurance is just that – an insurance contract between an employee, an employer, and the government.
In addition to breaking contracts with working people across the country, Congress would raise another $2.4 billion by re-establishing a policy that was a huge failure: the use of private tax collectors to recover taxes owed to the government (Section 52106 of the proposed bill). When tax collection services were outsourced in 2006, proponents said the shift would raise $2.2 billion. After the costs of the contractor and oversight expenses were paid, the program ended up costing taxpayers $4.5 million. Federal tax collectors who work at the IRS collect 62 percent more in back taxes than private tax collectors.
A better way to pay for highways: stop corporations from shipping profits overseas.
While Congress looks for ways to shave and shrink support for working people, they continue to ignore the enormous piggy bank parked in the offshore garage.
U.S corporations currently owe taxes on more than $2.1 trillion in profits they hold offshore. These are taxes owed on profits they have already earned. A loophole in the U.S. tax code allows multinational corporations to put off paying these taxes until they bring these profits back to the U.S. But other loopholes allow companies to legally leave the money offshore and borrow against it, effectively allowing them to use these funds, which corporations often wrongly claim are “trapped,” anywhere in the world. Closing this loophole would raise at least $590 billion over the next decade, according to official congressional estimates.
In our Burning Our Bridges report earlier this year, we examined offshore tax avoidance among just 26 U.S. corporations that excel at the game of corporate tax dodging. These 26 firms collectively have $1.3 trillion stashed offshore, 62 percent of the total held by the nation’s 28 million businesses. Our report then looked at the infrastructure repairs we could make if these companies paid the taxes they owe.
For instance, we could repair the one in nine U.S. bridges deemed structurally deficient if seven pharmaceutical corporations paid their outstanding taxes on the profits they’ve shifted offshore using legal accounting tricks. And we could fund the entire $45 billion cost of the proposed Highway Trust Fund bill if just one company – Apple – paid the $44.7 billion it told its shareholders it owes on its foreign profits.
Rather than turning to gimmicks like cutting Social Security and unemployment benefits to those who have paid into the system during their working lives and now rely on them to get by, or outsourcing critical IRS functions like tax collections, it is time for Congress to face the elephant (and the donkey) in the room and demand that America’s most prosperous corporations pay their fair share to support the public structures they need and use, just like the rest of us.
The nation's CEOs argue that America’s taxes make their businesses uncompetitive globally. This is a ridiculous claim in the face of record corporate earnings, near-record stock market prices, and CEO pay that continues to soar far past the compensation levels of CEOs in other nations. A far greater risk to our economic competitiveness is our nation’s crumbling infrastructure.
It’s time for Congress to require those who do well in America to do well by America. That’s the first step toward paving the way to a more prosperous future for all.
This post has been updated since its original publication date.