May 19, 2021
Senate Finance holds infrastructure hearing
The May 18 Senate Finance Committee hearing on "Funding and Financing Options to Bolster American Infrastructure" exposed party differences on how infrastructure investment should be paid for, with Democrats pushing for tax increases on corporations to pay their "fair share" for use of the nation's infrastructure, and Republicans favoring user fees, rolling back the tax incentives for EVs, and assessing a fee on EVs. Senator Sherrod Brown (D-OH) suggested, as President Biden and Speaker Pelosi have, that the parties could come together on the tax gap as a pay-for. There was significant discussion of bond issues, and Chairman Ron Wyden (D-OR) said he and Ranking Member Mike Crapo (R-ID) both support a revival of Build America Bonds, or governmental bonds eligible for certain tax advantages.
The hearing comes as a push for broad investment in infrastructure is a main policy priority of the Biden administration, and the two parties are tussling over what infrastructure includes and how to pay for it. The highway authorization expires on September 30, so some action is needed by Congress before then even if not as transformative as Democrats envision.
In an opening statement, Chairman Wyden said, "It's long past time for mega-corporations to pay a fair share for building and repairing roads and bridges" and "there's lots of talk about how it's got to be "user fees" that pay for infrastructure, but that's not a step toward fairness." Senator Crapo, who is part of a group led by Senate Environment & Public Works Ranking Member Shelley Moore Capito (R-WV) who met with President Biden last week and again today to try to find a deal, said, "Consideration of offsetting the cost of infrastructure with a corporate tax rate increase or increases in international taxes, especially coming out of the largest negative shock to the economy on record, is counterproductive and a non-starter on my side of the aisle," and Congress should consider user fees and ensuring "EVs are paying in their fair share."
- Joseph Kile, Ph.D., Director of Microeconomic Analysis, Congressional Budget Office
- Victoria Sheehan, President, American Association of State Highway and Transportation Officials
- Heather Buch, Subcommittee Chair, Transportation Steering Committee, National Association of Counties
- Shirley Bloomfield, Chief Executive Officer, NTCA — The Rural Broadband Association
Testimony in brief:
- Kile said financing options available to lawmakers include expanding the use of tax-exempt bonds, establishing a new program to provide state and local governments with the opportunity to issue new tax credit bonds, increasing the use of Transportation Infrastructure Finance and Innovation Act (TIFIA) loans, and more tolling on Interstate highways.
- Sheehan emphasized the need for a long-term funding solution for the Highway Trust Fund.
- Buch called for restoring the tax exemption for advance refunding bonds.
- Bloomfield emphasized that, "Any resources provided as part of an infrastructure plan should look to get the best return on … long-term investments."
Statements and testimony are available here.
Additional information is available in the attached Tax Alert.
Senate Finance infrastructure hearing