A Plan to Fix Bridges and the Corporate Tax Issue: Op-Ed
Sadly Thursday we learned again how fragile much of America's infrastructure really is as a bridge collapsed in Washington state. This scene is playing out far too often these days and is showing little signs of getting better.
By one estimate, there are more than 68,000 "structurally deficient" bridges in America. Another report suggest we need to spend more than $20 billion annually just to work through our bridge backlog by 2028.
That's money the state and federal governments do not have.
Corporate America has money, though. Lots of it.
By one estimate there is more than $1.45 trillion in corporate cash stashed outside the country. That's trillion with a "t." But companies have been largely unwilling to bring that money home because of the massive tax bills they would be faced with. This has led to yet another outcry by Congress, this time over Apple's tax strategies, that the American people are essentially being ripped off by these complex (but legal) tax tactics.
And since many of the men and women in Congress helped create the very same tax regulations they are now slamming in showboating hearings, it is clear we are unlikely to see meaningful tax reform anytime soon.
So, we have both failing infrastructure with little money to pay for it and huge amounts of money wasting away overseas.
As I sat dead-stopped on a New Jersey Transit train Friday morning waiting for an old drawbridge to slowly close I had an idea to perhaps bridge the two issues, literally.
First, create a massive infrastructure "bank" run by a board of private and public sector employees. Do not place it under direct federal government control but have the board report to Congress each quarter.
To fund it, provide U.S.-based companies with a five-year repatriation amnesty period where all money brought back to America that's put into the infrastructure bank will not be taxed. Not the 35 percent current corporate tax rate. Zero percent. Five years.
The stipulation is that the money they would have paid in taxes under the actual rate must go into the infrastructure bank. Perhaps both no taxes and the knowledge that what would've been their tax bill is going to real, physical projects to better the country, rather than to an unknown end in the Treasury, will entice them. Remember, we're only talking about the money that would've gone to taxes, not the excess cash above the 35 percent rate. That belongs to the shareholders.
Third, match each corporate dollar one-for-one with taxpayer funds. It would almost act like a 401(k) with matching employer contributions and greater incent companies to contribute.
The monies would then be disbursed over the next few years and decades to build up our roads, bridges, airports and rail systems. Projects would be determined by the "bank" board rather than Congress or the federal government to avoid the usual crony capitalism and pet project preferences the American people have become tired of. A public and private partnership would better be able to determine projects based on need and cost/benefit analysis.
The goals of the infrastructure bank are the following:
- Provide billions—if not trillions—to rebuild our crumbling infrastructure
- Create well-paid, multiyear jobs on large projects
- Benefit sales of many of the companies sending their own cash home (think: all the new Caterpillar bulldozers bought to build roads partly from Cat's own cash repatriation)
- Boost GDP with money that already exists (no need for Fed printing here)
- Help restore a bit of faith in corporate America as it seeks to do the right thing
That last point is a little more subjective but perhaps important. We know hoards of people have left the stock market over the past decade, some of whom may have sold out because of what they viewed as a corporate America that's lost its way. A nation cannot have successful capital markets if investors keep fleeing. Without investors, all the smart tax strategies in the world won't matter anyway. Stocks need buyers. Buyers need confidence and faith in what they're investing in. Giving billions to create jobs, advance the country and establish a firm infrastructure foundation for the coming generations may help create some badly needed positive P.R. at little to no cost for a company or its shareholders.
We know that companies have a duty to maximize profits by seeking smart tax strategies. So too should they have a duty to help make sure the country giving them the opportunity to succeed has the physical tools to stay that way. Perhaps this idea can accomplish a little of both.
—Follow Brian Sullivan on Twitter @SullyCNBC