Highway Robbery

Timothy Birdnow

Both parties of Congress just don't get it; we're broke, yet they continue to spend as if we had all the

money in the world. Take this abomination that passes for a highway bill.

http://www.cato.org/pub_display.php?pub_id=14086

According to the Cato Institute:

"Anyone still wondering why there is a disconnect between grassroots limited-government conservatives and

the Washington establishment need look no farther than the latest highway bill currently making its way

through Congress with support from Republican leaders in both houses.

The Senate version, SB 1813, would cost $109 billion over two years. The House bill, HR 7, which runs to

847 pages of pork and special-interest projects, raises the price tag to $260 billion, but extends it over

five years, making it a couple billion cheaper on a year-by-year basis.

Today's highway bills are more about the type of local road construction and maintenance that is properly

the province of state and local governments.
In theory, of course, the highway bill is supposed to be paid for out of the Highway Trust Fund. But

according to the Congressional Budget Office, the Trust Fund, which is funded by the federal gas tax, will

collect only $187 billion over the next five years, meaning that the House bill spends $73 billion more

than it takes in. To fill this gap, the House would rely first on some $20 billion in unspent money

currently in the Trust Fund. But this is just the same type of Washington bookkeeping we’ve seen with

other “trust funds” such as Social Security. That money is not “unspent.” In reality it was spent long

ago, and what the Trust Fund actually holds is simply government bonds that will have to be redeemed out

of general revenues. Beyond these funds, the House bill includes a number of other revenue-raising

mechanisms, such as royalty payments from allowing drilling in the Arctic National Wildlife Refuge and

offshore areas. But those provisions will never survive the Senate, leaving a shortfall that will result

in either greater budget deficits or higher gas taxes."

End excerpt.

It appears that the last election is entirely forgotten by both parties, and it's back to business as

usual.

H.R. 7 has the following sponsors:

http://www.govtrack.us/congress/bill.xpd?bill=h112-7

Rep. John Mica [R-FL7]
John Duncan [R-TN2]

And in the Senate? The "highway funding" dips deeply into the pockets of American taxpayers.

From the U.S. Senate Committee on Finance:

http://finance.senate.gov/newsroom/chairman/release/?id=d22e89ff-f03c-4652-a114-c1337cda3e95

"Additional Transfer to the Highway Trust Fund of Proceeds on Certain Imported Tariffs. The Chairman’s

Modification would transfer additional tariff revenue to the Highway Trust Fund for such a period as

necessary to fully fund the Highway Trust Fund. This provision would transfer $2.618 billion to the

Highway Trust Fund.

Require Distributions of Inherited IRAs within 5 years. Under current law, holders of IRAs and 401(k)-

type accounts are required to begin taking taxable distributions from those accounts once they reach age

70-1/2. However, they can stretch those distributions over many years if they leave their account to a

very young beneficiary. When the account holder dies, the taxation of the account is then spread over the

life of the beneficiary. The Chairman’s Modification would require the retirement savings accounts to be

treated, for tax purposes, as distributed within five years of the death of the account holder, unless the

beneficiary is the account holder’s spouse, a disabled or chronically ill individual, a minor child or

someone within 10 years of the account holder’s age. This provision is estimated to raise $4.648 billion

over ten years.

Reverse Morris Trust Transactions. Under current law, taxes are generally imposed on parent corporations

where they extract value in excess of basis from their subsidiaries prior to engaging in a tax-free spin-

off transaction. Therefore, if a subsidiary corporation distributes cash or other property to its parent

in excess of the parent’s basis in the subsidiary or if a subsidiary corporation assumes parent debt in

excess of the parent’s basis in the subsidiary the parent corporation will recognize gain. However, taxes

are not assessed if a subsidiary corporation distributes its own debt securities to a parent corporation

prior to a spin-off transaction even where the value of these securities would exceed the parent

corporation’s basis in its subsidiary. The Chairman’s Modification would treat distributions of debt

securities in a tax-free spin-off transaction in the same manner as distributions of cash or other

property. Subject to a transition rule, the provision would apply to exchanges after the date of

enactment. This provision is estimated to raise $244 million over ten years.

Modification to Provision to Close Black Liquor Loophole (portion of Crapo #1). The Chairman’s

Modification would allow taxpayers to claim and carry forward the Section 6426 50-cent per gallon credit

but not the Section 40 $1.01 per gallon cellulosic tax credit for black liquor produced prior to January

1, 2010. This provision is estimated to raise approximately $1.588 billion over ten years.
Clarify IRS Levy Authority for Funds in a Thrift Savings Plan Account (Hatch #2). The Chairman’s

Modification would provide that funds in Thrift Savings Plan accounts of federal employees would be

subject to legal process by the Internal Revenue Service for payments of delinquent taxes. This

provision is estimated to raise $25 million over ten years.

Parity for Exclusion from Income for Employer-Provided Mass Transit and Parking Benefits (Schumer,

Menendez, Carper, Cardin #1). The Chairman’s Modification would extend through 2012 the increase in the

monthly exclusion for employer-provided transit and vanpool benefits to that of the exclusion for

employer-provided parking benefits. This provision is estimated to cost $139 million over ten years.
Bank Qualified Bonds (portion of Bingaman #2). The Chairman’s Modification includes a modified version of

an amendment that would expand the ability of small issuers to sell bank-qualified bonds from $10 million

to $30 million for bonds issued after the date of enactment and before January 1, 2013. This provision is

estimated to cost $356 million over ten years.

AMT Relief on Private Activity Bonds (Kerry, Menendez #2). The Chairman’s Modification would provide

alternative minimum tax (AMT) relief to investors in private activity bonds that are issued after the date

of enactment and before January 1, 2013. This provision is estimated to cost $215 million over ten years.
Transportation and Regional Infrastructure Bonds (TRIPs) (Wyden #1). The Chairman’s Modification would

create placeholder language that would amend Title 23 of the United States Code to allow state

infrastructure banks to issue TRIP bonds, 100 percent of the proceeds of which must be spent on qualifying

transportation projects and the term of the bond cannot exceed thirty years. The provision would also

allow state infrastructure banks to create TRIP bond accounts, which is where proceeds from TRIPs would be

deposited. The provision does not have a revenue effect.

A full list of amendments filed by committee members is currently available, and a description of the

Modified Chairman’s Mark will be posted on the Finance Committee’s legislation website here."

End excerpt.

HUH!?

What do savings plans and the alternative minimum tax have to do with building roads? Yet the GOP remains

silent - and in an election year, no less.

We should kicke EVERYONE out and start fresh.