Paul, Boxer intro bill calling for 6.5% tax on repatriated foreign earnings to fund highway spending

Updated Apr 21, 2015
Republican Sen. Rand Paul and Democratic Sen. Barbara Boxer.Republican Sen. Rand Paul and Democratic Sen. Barbara Boxer.

As we near the May 31 funding deadline for the Highway Trust Fund (HTF), an expected flurry of proposed legislation to extend funding is popping up, with the latest being a bipartisan proposal from Senators Barbara Boxer (D-California) and Rand Paul (R-Kentucky).

Their Invest in Transportation Act, S. 981, would ask for companies to voluntarily return foreign earnings to the U.S. and be taxed at 6.5 percent, all the proceeds of which would go to the HTF. The two senators first proposed this corporate tax holiday back in February.

The estimate is that roughly $2 trillion in foreign earnings could be taxed this way.

This would apply to earnings from 2015 or earlier and only on repatriations exceeding “each company’s average repatriations in recent years,” according to a statement on the bill. The “transfer” would have to be completed within five years, but funds must start coming back to the U.S. beginning in the first year.

The repatriated funds must be used in the following ways:

  • Twenty-five percent used for more hiring, raising wages and pensions, research and development, environmental improvements, public-private partnerships, capital improvements, and acquisitions.
  • Research and development spending, more hiring and capital improvements cannot supplant funding that has been previously planned.
  • Executive compensation cannot be funded.
  • Inversion within 10 years would require repaying, with interest the tax incentive.

Updates on the bill’s status will be available here.