Sen. Sherrod Brown (D-Ohio) is giving a firm thumbs down to the idea of giving corporations that shelter profits overseas a deep tax break if they bring those profits back into the U.S. and devote a sliver of those profits to buying bonds for highway and public transportation projects.
“I’d love to get that money back, find incentives to do it, but we have to fix our international tax system,” Brown said at a news conference today. He was responding to a question about legislation in Congress that would use the tax-break-for-infrastructure-bonds idea as one way to make up for a shortfall in the federal Highway Trust Fund, which is projected to run dry in a matter of weeks.
Giving corporations a “repatriation tax holiday” on the profits they have parked overseas to avoid U.S. taxes would only encourage corporations to keep sheltering their profits overseas, as well as shifting jobs and production overseas, in anticipation of more tax holidays. “We should not pass more laws that encourage that kind of behavior,” Brown said.
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Brown proposed a different short-term solution for the Highway Trust Fund that would have long-term benefits for workers. He has introduced a bill that would ensure that full-time workers are not misclassified as independent contractors. The Fair Playing Field Act would enable the Internal Revenue Service to write regulations and make determinations about whether a particular employee is properly categorized as an employee or a contractor.
Because income and payroll taxes often go unpaid when a full-time worker is treated instead as an independent contractor, Brown said that his legislation would raise as much as $5.5 billion over 10 years, which could be counted as a one-year offset for money appropriated for the Highway Trust Fund.
Steve Schramm, the vice president of OK Interiors, a unionized construction contractor in Cincinnati, was with Brown to show support for the legislation. He said worker misclassification puts honest businesses at a disadvantage, and it deprives workers of overtime pay and benefits. What workers lose in pay and benefits ends up padding the profits of the company rather than translating to lower costs for goods or services, Schramm said.
“Contractors misclassify workers because they make money doing it,” he said.
Brown said that his proposal is not intended to be a subsitute for a long-term transportation funding plan, which would enable states to once again plan and execute multi-year projects.
One of those projects is the Brent Spence Bridge, on Interstates 71 and 75 connecting Cincinnati to Kentucky. The bridge was originally built in 1963, and because of its strategic location it is on one of the busiest trucking routes in the country.
“Somebody said – and this was the first time I had heard this – that the Brent Spence Bridge, something like 3 to 5 percent of GDP crosses that bridge,” Brown said. “So when there is congestion on that bridge, it affects Krogers, it affects UPS, it affects all kinds of businesses.”
However, the bridge was listed by the federal government as “structurally obsolete” in 1998, and there is a plan on the books to expand the bridge as well as the connecting interstates.
That bridge is just one example of what is at stake of Congress does not move on a long-term solution to adequately fund our need for a transportation network that enables the economy to efficiently function and grow.