Here’s a novel idea. U.S. companies are sitting on more than a trillion dollars that could be invested in infrastructure. The funds are in overseas banks, and companies are reluctant to transfer the funds back to the U.S. and have to pay a tax of up to 35%. Two prominent DC insiders suggest:
“Why doesn’t Congress let firms bring back their overseas profits without taxation — if, and only if, they put the money into an infrastructure bank for a certain period? This bank would then issue low-interest, long-term loans for projects that in flusher times would be funded by municipalities or utilities,” (Rebuild American infrastructure? Companies’ offshore profits can help, Washington Post).
The proposal comes from Reed Hundt, chief executive of the Coalition for Green Capital (and a former chairman of the Federal Communications Commission) and Thomas Mann, a senior fellow at the Brookings Institution. They note that “If we put the offshore profits and infrastructure bank problems together, we might find a solution that works for both sides of the aisle, even in these sharply polarized times.” They explain how the proposal might work:
“The bank would dedicate its capital solely to American infrastructure. That way, U.S. firms’ profits overseas would come back to rebuild America. At least one study of the effect of the 2009 American Recovery and Reinvestment Act suggests that a billion dollars of investment in construction-related activity could create about 10,000 job years. A trillion dollars of investment, then, equates to 10 million job years, created between now and 2020. McKinsey and Co. found recently that by the end of this decade the United States needs 21 million new jobs to achieve full employment. In that light, our proposed infrastructure bank is more of a must-have than a nice-to-have new institution.
Private-sector infrastructure initiatives across the range of transportation, communication and energy needs (examples include high-speed rail in the Northeast Corridor, energy-sector generation and building efficiency), some operating under public-private partnerships, could be launched expeditiously to generate jobs and investments critical to our economic recovery and long-term growth.
If we put the offshore profits and infrastructure bank problems together, we might find a solution that works for both sides of the aisle, even in these sharply polarized times.”