GOP and Democrats swap places on drivers who pay for infrastructure |

The debate over how to pay for the country’s roads, bridges and transit systems has led some normally tax-averse Republicans to pass higher levies on motorists – even a new one based on kilometers driven instead of the fuel purchased.

But some Democrats who supported the idea of ​​charging mileage charges are now opposing it. They see infrastructure as an economic stimulus and want it to be paid for through corporate taxes.

This shift in stance puzzles Washington observers.

“If you were in the positions and went back 10 years, you would say, ‘What? “Said Adrian Moore, vice president of policy at the Reason Foundation, a libertarian think tank.

The debate over whether motorists or businesses should foot the bill threatens to scuttle negotiations between President Joe Biden and Senate Republicans for a massive infrastructure plan. Biden withdrew from one-on-one talks with West Virginia Republican Senate Shelley Moore Capito, but the White House said he was still engaged with a separate, two-party group of senators despite some Democrats lobbying for their party to go it alone.

Although the president is in the UK for the Group of Seven summit, Democrats in the bipartisan group visited the White House on Thursday. “The issues need to be addressed, especially around the details of politics and compensation, among others,” White House spokesman Andrew Bates said.

Indexing the gasoline tax – currently 18.4 cents a gallon – to a measure of inflation has been discussed by the bipartisan group working on a compromise plan, according to Mitt Romney, a Republican from Utah who played a leading role in these talks. He said it wouldn’t make a lot of money.

Dick Durbin, No. 2 Senate Democrat, said Thursday he was in favor of indexing the gasoline tax. Still, it’s unclear whether the White House would approve such a move.

Just two months ago, Transportation Secretary Pete Buttigieg said the so-called vehicle-kilometer tax was being considered in the Biden administration as a way for all motorists to pay for maintenance. roads. The advantage of VMT is that it would compensate for the losses of the federal tax on gasoline caused by the growth in sales of electric cars.

But the White House has since turned the tide, saying it would violate Biden’s pledge not to raise taxes for the middle class.

“I’m working hard to find common ground with the Republicans on the American jobs plan, but I refuse to raise taxes for Americans earning less than $ 400,000 a year to pay it off,” he said. Biden tweeted on Tuesday. “It is high time the rich and the corporations paid their fair share.

Democrats have looked into the idea of ​​raising taxes for large corporations, including some that saw their taxes cut under the Trump administration.

“This view that cutting taxes on the rich is good for the economy, there is no evidence that it is,” said Sen. Sherrod Brown, a Democrat from Ohio, on Wednesday. “They would rather increase the gasoline tax for a person by $ 60,000 a year than for a person by $ 300 million a year increase his income tax.”

Republicans balked at raising corporate taxes to pay for roads.

“If you look at the last 30 years where we’ve bipartisanly passed infrastructure bills here in Congress, they’ve always been based on user fees of some sort,” Rep. Darin LaHood said, a Republican from Illinois at a press conference in May. 19 Hearing of the House Ways and Means Committee.

“But instead, today we are talking about tax code hijacking by talking about raising corporate rates to finance infrastructure,” he said.

Texas Republican Senator John Cornyn suggested last month that a 25-cent tax be imposed on every kilometer driven by heavy trucks to raise $ 33 billion a year, about as much as the tax on fuels.

The truckers immediately raised objections.

“We are not opposed to VMT,” said Bill Sullivan, executive vice president for advocacy at the American Trucking Associations, which lobbies for large trucking companies. “What we are vehemently opposed to is this idea of ​​’Let’s do this for the trucks’.”

Republicans who opposed previous efforts to increase the gasoline tax or the passage of a kilometer charge argued that it disproportionately affects low-income people, said Greg Regan, chairman of the department. AFL-CIO transport. Now it’s the Democrats making this argument and the GOP suggesting that user fees should be used to pay for roads and public transportation.

Ed Mortimer, vice president of transportation and infrastructure at the U.S. Chamber of Commerce, attributed Republicans’ shift in stance on user fees to their habit of seeing electric vehicles as a state phenomenon blue. So, he said, they ignored warnings about a gasoline tax deficit – until Republican-led states began to see their fuel taxes cut.

“Some Republicans who may have been wary of user fees, when it comes to increased user fees or corporate taxes, may have had a different perspective, ”Mortimer said.

Sam Graves of Missouri, the top Republican on the House Transportation and Infrastructure Committee, argued that a VMT could easily be implemented using a gas pump-rated formula similar to how the fuel tax is paid.

Such a charge would also help consolidate road funds. Taxes on gasoline and diesel exclude a whole new category of motorists on the road: electric vehicle drivers. Funders say it would help close the gap in federal funding for roads. The gasoline tax brings in $ 34 billion per year, while federal spending on highways and public transportation exceeds $ 50 billion per year.

“The suggestion is that middle-class workers are going to pay what mega-corporations won’t pay,” Oregon Democrat Ron Wyden, Senate finance committee chairman, said at the panel hearing. on infrastructure financing in May. “This is not a step towards fairness.”

Wyden said he would consider any gasoline tax indexation proposal such as the one Romney said was under consideration before commenting. He pointed out that Biden had a “reservation on this as a regressive tax” and underscored the Democratic view that companies are currently paying less tax.

Senator Chuck Grassley, a veteran Republican from Iowa, remarked Thursday of the indexation of the tax that “it is better than increasing the tax on gasoline and it has a better chance of be done”. He also said that if this had been done in the early 1990s, “we would not be in the situation we are in now”.

While funding for roads should be part of the infrastructure plan, Congress is still working on a stand-alone bill to replace a five-year, $ 305 billion law that has been extended until September 30. The House passed a five-year, $ 494 billion Surface Transportation Bill in July 2020, but the measure was not approved by the Senate. Democrats in the lower house have tabled a $ 547 billion surface transportation bill. House Republicans responded with a smaller measure of $ 400 billion.

Former U.S. Transportation Secretary Rodney Slater, who served in the Clinton administration, said the latest gasoline tax hike, to 18.4 cents per gallon from 14 cents per gallon in 1993, was related to a federal deficit reduction effort. It was passed without Republican votes.

It wasn’t until 1998 that the additional 4.3 cents per gallon went to the Highway Trust Fund, Slater said.

Slater said examination of potential gasoline tax replacements, including mileage charges, dates back to the Clinton years. He cited the creation of the Transportation Infrastructure Finance and Innovation Act and the Railroad Rehabilitation and Improvement Financing in 1998, in addition to early VMT explorations.

“We have tried to go for a VMT arrangement,” he said. “We recognized that we cannot rely solely on the gasoline tax to fund transportation. We were starting to explore innovative financing techniques.


© 2021 Bloomberg LP

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