"Out-of-the-box" idea to fund surface transportation at the federal level

[Rootchopper]

It is astounding to me what lengths politicians will go to to avoid a simple solution that might cost them votes. Just raise the gas tax in 5 cent increments every other month for a couple of years, then index it to inflation. Oooh, $3.00 per gallon gas! How will we ever cope? (I know, it won’t raise all the money needed, but taxing vehicles should also be added.)

[Greenbelt]

This repatriation thing has been around the block for a long time. When I worked for a think tank, I used to get lobbied by the big pharma companies to write supportive reports on the idea. I never did, because I never really figured out how it wouldn’t just be a repeating scam — stash the cash overseas to avoid tax, lobby for a temporary tax reprieve, repatriate that cash at a favorable rate, then stash overseas again, rinse, repeat etc. Tax avoidance strategies are pretty out of hand, and this seemed to me just a new wrinkle on a butt ugly backside.

[Terpfan]

@Greenbelt 107833 wrote:

This repatriation thing has been around the block for a long time. When I worked for a think tank, I used to get lobbied by the big pharma companies to write supportive reports on the idea. I never did, because I never really figured out how it wouldn’t just be a repeating scam — stash the cash overseas to avoid tax, lobby for a temporary tax reprieve, repatriate that cash at a favorable rate, then stash overseas again, rinse, repeat etc. Tax avoidance strategies are pretty out of hand, and this seemed to me just a new wrinkle on a butt ugly backside.

Well, on the state side, they would occasionally do tax forgiveness type holidays where they would wipe out most interest/penalties if the amounts were paid in full in xyz time. It was a net winner for the state government.

Definitely a new wrinkle, but frankly, I think it makes sense. I mean, the flip side to this is they simply become foreign-based companies, which removes everything. I do think you raise a good point though of what’s to prevent them from the rinse and repeat cycle. And I suspect the answer has to be some form of longer-term corporate income tax rate lowering. I mean, we have one of the highest rates so it’s not too surprising people use off shore shelters. There must a way to study the macro level of when it’s most advantageous not to bother with moving it offshore and just keep it here. That’s the magic number.

[mstone]

@Terpfan 107845 wrote:

Well, on the state side, they would occasionally do tax forgiveness type holidays where they would wipe out most interest/penalties if the amounts were paid in full in xyz time. It was a net winner for the state government.[/quote]

Sure, in a political climate that feels that cutting tax code enforcement is the only good change you can make to tax code enforcement.

Quote:

Definitely a new wrinkle, but frankly, I think it makes sense. I mean, the flip side to this is they simply become foreign-based companies, which removes everything.

I’d rather see that than see them enjoy the benefits of the US system without paying for it.

[Terpfan]

@mstone 107851 wrote:

Sure, in a political climate that feels that cutting tax code enforcement is the only good change you can make to tax code enforcement.

The great change I would make is if the government incorrectly forces you to pay them extra tax dollars then you get to claim the same level of interest and penalties that they would charge you for screwing up. Alas, I dream.

I’d rather see that than see them enjoy the benefits of the US system without paying for it.

Ha. My point was that competition exists and our policies always seem to be on the trailing end. It’s why I think this isn’t such a bad proposal. Particularly not if you can find a mechanism to keep the money here.

[brendan]

As an aside, having read up a bit on the methodologies of foreign tax sheltering, my “favorite” evil move was transferring corporate patents/trademarks and other so-called “IP” to off-shore companies/subsidiaries created by your company, then paying those new entities exorbitant licensing feeds to use the very same patents/trademarks and other so-called “IP”. That way the profit converts to expense (in the U.S.) and re-emerges as profit in a much lower tax rate country.

Then, adjust (er, I mean “renegotiate”) the licensing fees yearly (or as necessary) to avoid U.S. corporate taxes regularly.

Brilliant!

B

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