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Biden Infrastructure Plan Will Be a Tough Sell, Says TIA

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President Joe Biden's "proposal to raise business taxes is going to (generate) a lot of opposition," says TIA's Littlefield.

 

When it comes to the Biden White House’s recently revealed American Jobs Plan, “the devil is in the details" - especially as it pertains to infrastructure funding, according to Roy Littlefield, CEO of the Tire Industry Association (TIA.)

President Joe Biden’s nearly $2.3 trillion plan earmarks $651 billion for transportation infrastructure. Approximately $115 billion of that amount would be set aside for fixing more than 20,000 miles of roads and highways, plus thousands of bridges.

The Biden Administration has proposed increasing the corporate tax rate to 28% to help pay for the plan. (Biden's predecessor, Donald Trump, reduced corporate tax rates from 35% to 21% in December 2017 via the Tax Cuts and Jobs Act.)

Littlefield says corporate tax hikes will be a tough sell to Republicans on Capitol Hill. 

“Everybody in the industry and almost everyone in America wants to see infrastructure funding, but it’s always (a matter of) who’s going to pay for it and who isn’t paying for it,” he explains.

On April 5, Republican Senate Minority Leader Mitch McConnell stated Republican opposition to the bill.

However, according to Littlefield, “if the Democrats can hold together like they did on the last COVID-19 (relief) bill,” the plan could be pushed through.

“It would be close - 51 to 50 in the Senate - but I don’t know if all Democrats will go along with this.” (West Virginia Senator Joe Manchin, a Democrat, says he has concerns about hiking the corporate tax rate to 28%.)

'Kicking the can' again?

Last October, the Senate passed a resolution authorizing the transfer of $10.4 billion to the Highway Trust Fund (HTF) from the general fund for highway and road maintenance. Another $3.2 billion was tapped to help keep the fund solvent. 

At the time, TIA officials said that “while TIA would have preferred having a bipartisan, long-term highway bill enacted this year, a one-year extension that includes funds to keep the HTF solvent is better than multiple extensions.”

Littlefield recalls that Senators on both sides of the aisle last year “were not going to budge, so they passed a one-year extension so all the current taxes continue to be collected and the funding was at the same level. 

“That's the minimum of what will happen” if Biden’s plan does not receive adequate support from either within his own party or across the aisle.

“Right now, the talk is that the highway trust fund will run out of money and it expires in September,” says Littlefield. “That’s when the one-year extension runs out.

"Now, people will say that to try to move this along politically. But I think we all recognize that if they get close to (the expiration date), they will kick the can again and we’ll have another extension.

“Somebody will have to face” the issue of infrastructure funding eventually “and somebody will have to pay for it," he adds.

"But I don’t know how” raising corporate taxes “ is going to fly” with Republican representatives - and even some Democrats.

The mass transit issue

Approximately $85 billion of the $651 billion total earmarked for transportation infrastructure improvements also would go to modernizing mass transit systems.

Littlefield says this is “a lot of money (proposed to fix) non-highway programs." 

Mass transit users in major metropolitan areas do not pay as much into road and highway maintenance as people who use personal vehicles regularly, he explains.

“You (also) have local governments lowering fares to subsidize” mass transit.

“And you have all this money coming from federal and state governments to pay for maintenance and expansion. 

“It’s not fair for someone who lives in a rural area or for people who commute every day, who are paying gas taxes. You have a lot of people in this country who don’t live anywhere near a mass transit system and will never use one, and yet they’re paying taxes - they’re paying highway money. So that’s an issue.

“The people who use (mass transit) should pay for some of that cost," he adds.

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