By Keith Laing - 04/16/15 04:31 PM EDT
Sen. Rand PaulRand PaulWhat the 'Bernie Sanders wing of the GOP' can teach Congress GOP senators avoid Trump questions on rigged election How low is the bar for presidential candidates, anyway? MORE (Ky.), a Republican presidential candidate, is teaming up with Democratic Sen. Barbara BoxerBarbara BoxerCalifornia House Republicans facing tougher headwinds House and Senate water bills face billion difference Boxer, Feinstein endorse Kamala Harris in two-Dem Senate race MORE (Calif.) on legislation to tax up to $2 trillion in corporate revenue currently stored in foreign banks to pay for domestic infrastructure projects.
The measure would offer companies a 6.5 percent tax rate on profits they return voluntarily to the U.S., known as repatriation, to boost federal transportation funding that is currently scheduled to expire in May.
Paul, who announced his White House bid earlier this month, said the proposal to tax overseas corporate profits is a “fiscally responsible” way to prevent an interruption of federal transportation spending this summer.
"I am proud to work with Senator Boxer today to introduce the Invest in Transportation Act of 2015,” he added.
Boxer, who has announced she is retiring in 2016, said it is important to replenish the Highway Trust Fund before it runs out this summer.
“This bipartisan repatriation proposal will stimulate the economy by bringing back hundreds of billions of American dollars currently sitting offshore,” she said.
The federal government’s transportation funding measure is scheduled to expire on May 31. The Department of Transportation has said it will have to begin cutting back on payments to state governments for construction projects that are already underway in July if Congress does not reach a deal to extend the funding.
Lawmakers in both parties have expressed a desire to prevent such an interruption in the road and transit funding, but they have been struggling to come up with a way to pay for an extension.
The gas tax has been the traditional source of transportation funding since its inception in the 1930s. The tax has not been increased since 1993, however, and its buying power has been sapped by improvements in car fuel efficiency in recent years.
The federal government typically spends about $50 billion per year on transportation projects, but the gas tax only brings in $34 billion.
Lawmakers have turned to other areas of the federal budget to close the $16 billion gap in infrastructure funding in recent years, but transportation advocates have complained the temporary patches are making it too difficult for state and local governments to plan long-term construction projects.
Paul and Boxer’s offices said Thursday that their repatriation proposal would allow lawmakers to craft a long-term extension of the transportation bill to prevent future standoffs such as the current crunch.
“All tax revenues from the repatriation program would be transferred into the Highway Trust Fund, helping to address the urgent federal funding crisis facing America's highways, bridges, and transit systems,” the lawmakers’ offices said.
They added that it would have a "real economic impact" across the country and provide "funding stability for state and local governments and businesses."
“Economic studies have found that repatriating some of the nearly $2 trillion in foreign earnings held by companies overseas could add several hundred billion dollars to GDP and help businesses create millions of jobs," the statement said.
Critics, though, have said the repatriation plan would cost the federal government more in the long run than it brings in for transportation projects.
“Tax holiday proposals designed to pay for the transportation bill sound great until you look at the details," Senate Finance Committee Chairman Orrin Hatch (R-Utah) said in January when Paul and Boxer first floated their repatriation plan.
"After all, the Joint Committee on Taxation (JCT) has clearly detailed how much a stand-alone temporary tax holiday would end up costing the government in the end," Hatch continued. "Saying you're going to use something that loses money to pay for anything is just wrong."
The nonpartisan JCT has said that a tax holiday would generate about $20 billion in revenue initially. The analysis said the plan would ultimately cost the federal government about $96 billion, as companies would have more incentive to keep their profits abroad and wait for another tax holiday.
Supporters of the repatriation-for-roads plan see it as more politically viable than increasing the gas tax, which has been suggested by transportation advocates in Washington.
"We can help fund new construction and repair by lowering the repatriation rate and bringing money held by U.S. companies back home,” Paul said about the plan when it was floated in February.
“This would mean no new taxes, but more revenue, and it is a solution that should win support from both political parties.”