Christie: Tax offshore profits to fund roads

Christie: Tax offshore profits to fund roads
© Fox Business

Republican presidential candidate Chris Christie said Thursday that corporate revenue that is stored overseas should be taxed at an 8.75 percent rate to pay for transportation projects in the nation. 

Responding to a question about paying for a backlog in infrastructure spending in Thursday night’s Republican presidential debate in South Carolina, the New Jersey governor called for “a one-time repatriation” of overseas corporate revenue he estimated to total $2 trillion. 

“Bring the money ... back to the United States, we’ll tax that one time at eight and three-quarters percent,” he said. “Because 35 percent of zero is zero, but eight three-quarters of $2 trillion is a lot of money. I would then dedicate that money to rebuilding infrastructure in this country.” 

The proposal to encourage companies to bring their profits back to the U.S., known as repatriation, has been floated often as replacement for the federal gas tax, which is traditionally used to pay for most of the nation’s transportation projects.  

The gas tax has been set at 18.4 cents per gallon since 1993, but it has struggled to keep pace with mounting construction costs as cars have become more fuel efficient. 

The federal government typically spends approximately $50 billion per year on transportation projects, but the gas tax only brings in about $34 billion per year. Lawmakers used about $70 billion from other areas of the federal budget to close the $16 billion annual shortfall for five years in a $305 billion highway bill that was passed late last year.

Most repatriation proposals that have been floated call for taxing overseas corporate taxes at rates between 6.5 and 14 percent.

President Obama has proposed a mandatory repatriation process that would require companies to bring back earnings to the United States, but most Republicans have pushed instead for a voluntary “tax holiday” to give companies an incentive to move money to domestic banks.

Critics have said voluntary repatriation plans would cost the federal government more in the long run than it brings in for transportation projects because companies would have more incentive to keep their profits abroad after the initial tax holiday.

Christie pitched the repatriation proposal in Thursday’s debate as way to avoid to asking drivers to pay more at the pump to help finance transportation projects. 

“It would not necessitate us raising any taxes,” he said. “It would bring money back into the United States to help build jobs by American companies and get our economy moving again and growing at a much higher rate, and it would rebuild those roads and bridges and tunnels that you were talking about.”