Tax Bills Would Hurt Infrastructure, Say Groups, Democrats

By Shaun Courtney

Infrastructure would take a hit under tax legislation, as the House bill proposes to scrap programs and the Senate version fails to address needs, according to transportation groups and Senate Democrats.

Transportation groups want the House and Senate tax bills to tackle the solvency of the Highway Trust Fund and boost support for infrastructure generally, groups wrote in letters to congressional leaders.

Meanwhile a Nov. 15 Joint Economic Committee Democrats’ report faults the House tax package (H.R. 1) for putting an estimated 4.5 million jobs at risk over next 10 years by eliminating Private Activity Bonds, the New Markets Tax Credits, and the Historic Tax Credit Program.

“Infrastructure cuts like the ones in the Republican tax plan would have a serious, severely negative impacts across the country,” Sen. Martin Heinrich (D-N.M.), JEC ranking member, said of the House measure during a call with reporters.

The House is expected to vote on its package Nov. 16. The Senate bill, which that body is continuing to consider in committee, doesn’t make similar cuts, but also doesn’t address transportation groups concerns about the Highway Trust Fund.

Senate Commerce, Science, and Transportation Committee Chairman John Thune (R-S.D.) thinks infrastructure investments should and would be considered after the tax package, he told Bloomberg Government. Thune is also a member of the Finance Committee, which is writing the Senate’s tax bill and is the third-ranking Republican in the Senate.

“The debate that will follow tax reform will be infrastructure and I think it will give us an opportunity to examine all of the different ways that we pay for infrastructure and how we are going to make sure that the Highway Trust Fund is adequately capitalized to keep up with all of the needs that are out there,” Thune said.

Highway Trust Fund

The Congressional Budget Office projects that the Highway Trust Fund will face a shortfall beginning in 2021.

“This is the prime opportunity to address the looming solvency crisis facing the [fund], which provides much needed transportation investments across the country,” Bud Wright, the American Association of State Highway and Transportation Officials executive director, wrote in a letter to Senate leaders dated Nov. 14.AASHTO, which represents the interests of state transportation departments, and the American Public Transportation Association have sent letters to the tax-writing committees in both chambers, as well as other key lawmakers.“We urge Congress to use this once-in-a-generation opportunity to reform the tax code to encourage greater investment in our nation’s infrastructure, not discourage it,” Richard White, acting president and CEO of APTA, wrote Nov. 10 to Senate leaders.

Thune said the tax bills could have included a Highway Trust Fund fix, but that it would have made a complicated tax rewrite process even more so.

Senate Republicans have continually signaled that they are waiting on the White House to come to them with a proposal on how to pay for the president’s $1 trillion infrastructure package. Thune said he is open to all ideas on how to fund the highway fund and infrastructure in general.

But transportation advocates called on Congress to identify funding streams and to do so in the tax bill.

When asked whose job it is to figure out how to fund infrastructure, Thune said it would be a joint effort.

“In the end, we’ll have to move a bill here, but I think it will be with input and plenty of consultation with the White House on what the president would sign,” Thune said.

Private Activity Bonds

The Private Activity Bonds that the House bill would jettison offer tax-exempt interest for qualifying projects such as airports, highways, water facilities, and docks. Without the tax-exempt interest option, borrowing would become more costly for qualifying entities.

The White House called for the cap on Private Activity Bonds to be lifted in some of the early and only information the administration released about its $1 trillion infrastructure proposal. The Department of Transportation has a $15 billion cap on the tax-exempt bonds it is allowed to issue on behalf of private entities.

The JEC Democrats’ report estimates that getting rid of Private Activity Bonds could put more than 3 million jobs at risk over the next 10 years, with another 1.5 million jobs threatened by the elimination of the two tax-credit programs.

Let’s Get Together

The JEC report was released in advance of the House vote on its tax package. Heinrich questioned what would happen when the House and Senate bills go to reconciliation, considering the different ways the two bodies address infrastructure.

“If this rushed tax bill does not come together and if they are not able to pass it on reconciliation, avoiding regular order, we should be willing to go back to the table and work with Republicans to craft a bipartisan tax package that makes our overall economy more competitive,” Heinrich said.

To contact the reporter on this story: Shaun Courtney in Washington at

To contact the editor responsible for this story: Paul Hendrie at

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.