Senators Rob Portman (R-Ohio) and Charles Schumer (D-New York) have released an outline for international tax reform aimed at reducing taxes on U.S. corporation overseas profits with a “transition tax” to help fund transportation projects.
“We need comprehensive tax reform because the American people deserve a simpler tax code that will give our economy a needed shot in the arm,” Portman said in a statement. “Although we need comprehensive reform, our report clearly demonstrates the urgency of addressing the international tax system, and how the right kind of international reform can be a step in the right direction for more comprehensive reform.”
“The bipartisan international tax reform framework released today by Senator Schumer and me,” Portman continued, “shows that our system of international taxation is woefully out-of-date. It has been 50 years since the U.S. has substantially updated its international tax laws, and by standing still, the U.S. has fallen behind.
“This report uncovers three truths about international tax reform: first, the marketplace is becoming more international, with 80 percent of global purchasing power currently residing outside of the U.S.; second, U.S. workers benefit when the businesses they work for can compete and win in those markets—winning abroad means more jobs and higher wages here at home; third, the U.S. is falling behind in those markets. Our report shows a bipartisan framework for how we can update our international tax code, giving U.S. companies the tools they need to compete and win on a level playing field with their international competitors, leading to more jobs and higher wages here at home.”
Specifically for transportation, the final report from Portman and Schumer posits following the Obama administration’s proposal of a one-time tax on untaxed foreign income to be used to pay for surface transportation reauthorization and shortfalls in transportation spending for fiscal year 2016. The report can be reviewed here.
For many Republican leaders, any new tax proposal for transportation funding is a non-starter, but House Ways and Means Chairman Paul Ryan (R-Wisconsin) said in a Washington Post report that he supports the ideas put forth by Portman and Schumer.
“These ideas could serve as the basis for a bipartisan package to stem the tide of inversions and takeovers, advance important permanent tax extenders, and potentially unlock a solution to our highway trust fund shortfall,” Ryan said.