Citizens for Tax Justice released a new report detailing options to raise revenue, which could help lawmakers in their pursuit of tax reform to lower the debt. The revenue-raisers in the report are divided into three categories – those that raise money from high-income individuals, businesses, and multinational corporations. Within those categories, the report distinguishes between options that would only be considered in the context of tax reform and less significant changes that could be enacted on their own. Finally, the report helpfully separates the permanent and temporary impacts for provisions that raise greater revenue upfront.
Our recent paper Trust or Bust: Fixing the Highway Trust Fund called on lawmakers to identify a long-term fix to the funding gap in the Highway Trust Fund (HTF). Unfortunately, it appears unlikely that there is sufficient time to enact a fix before funds fall too low and disrupt construction this summer. A short-term patch can be enacted by transferring funds from general government revenue. To be fiscally responsible, however, this transfer should be fully offset elsewhere in the budget.
Previously, we discussed long-term options to restore highway solvency by cutting spending, raising more from current highway taxes, and raising new taxes. Below are tax, spending, and other options that could pay for upfront general revenue transfers to shore up the HTF in the short-term, although they leave the HTF's chronic imbalance in place. These options can buy time, but they do not replace the need to identify a long-term solution to bring dedicated revenue and spending in line.
|Options To Offset a Transfer of General Revenue|
|Policy||Ten-Year Savings||Trust Fund Extension|
|Dedicate one-time "deemed repatriation" tax to the HTF||$125 billion||8 years|
|Dedicate temporary transition revenue from repealing LIFO to the HTF||$90 billion||6 years|
|Repeal certain oil and gas tax preferences^||$35 billion||30 months|
|Eliminate tax exclusion for new private activity bonds||$30 billion||24 months|
|Require filers to have a SSN to file for a refundable child tax credit||$20 billion||16 months|
|Eliminate Amtrak subsidies*||$15 billion||12 months|
|Eliminate "Capital Investment Grants" for the rail system*||$15 billion||12 months|
|Reduce farm subsidies||$15 billion||12 months|
|Close Section 179 "luxury SUV loophole"||$10 billion||8 months|
|Reduce Strategic Petroleum Reserve by 15 percent||$10 billion||8 months|
|Increase sequestration by $1 billion/year||$10 billion||8 months|
|Repeal tax deduction for moving expenses||$10 billion||8 months|
|Clarify worker classification||$5 billion||4 months|
|Prevent "double dipping" between unemployment & Social Security Disability||$5 billion||4 months|
|Allow drilling in ANWR and the Outer Continental Shelf||$5 billion||4 months|
|Reduce federal research funding for fossil fuels and nuclear energy*||$5 billion||4 months|
|Repeal or phase-out tax credit for plug-in electric vehicles||$1.5 - $5 billion||1 - 4 months|
|Require inherited IRAs to be paid out within 5 years||$4 - $5 billion||3 - 4 months|
|Extend current Fannie/Freddie fees through 2021||$4 billion/year||3 months|
|Extend customs fees through 2024||$4 billion||3 months|
|Deny biofuels credit for black liquor (retroactively)||$3 billion||3 months|
|Increased mortgage reporting||$2 billion||~2 months|
|Require the IRS to hire private debt collectors||$2 billion||~2 months|
|Enact federal oil and gas management reforms in the President's Budget||$2 billion||~2 months|
|Devote mandatory aviation security fee to deficit reduction through 2024||$1.5 billion||~1 month|
|Make coal excise tax permanent||$1.5 billion||~1 month|
|Make Travel Promotion Surcharge permanent||$1.5 billion||~1 month|
|Clarification of statute of limitations on overstatement of basis||$1.5 billion||~1 month|
|Close the "gas guzzler" loophole||$1 billion||~1 month|
|Revoke passports for seriously delinquent taxpayers||< $0.5 billion||<1 month|
Sources: CBO, OMB, JCT, and CRFB calculations
All numbers are rounded and calculated by CRFB based on a variety of sources.
*These discretionary changes would need to be accompanied by reductions in the discretionary spending caps.
^Includes expensing for exploration and development as well as the “percentage depletion allowance”
Without a fix soon, the Highway Trust Fund (HTF) will run out of money this summer, slowing down infrastructure projects across the nation.
Senators Chris Murphy (D-CT) and Bob Corker (R-TN) announced a proposal this week to close the Highway Trust Fund (HTF) shortfall by increasing the gas tax by 12 cents a gallon over the next two years and indexing it to inflation. As we highlighted in our transportation paper this week, Congress should come up with a long-term solution to permanently solve the structural imbalance between current spending from the HTF and dedicated revenues into the HTF.
With the Highway Trust Fund (HTF) running low and the threat of disrupting highway construction later this summer, lawmakers are scrambling to come up with a short-term solution to add more money to the fund. However, a new Joint Committee on Taxation analysis shows that one popular idea to "pay" for the transfer – a tax holiday for corporations returning cash held overseas, or "repatriation tax holiday" – actually adds to the debt and therefore cannot be used as an offset.
We have already shown how both federal health care spending and revenue projections have been revised downward by $900 billion and $4.2 trillion, respectively, through 2021 since CBO's March 2011 baseline. Another story -- one that is a continuation of a trend since the Great Recession -- is the deterioration of Social Security's finances.
The House and Senate appear to be taking different approaches to the "tax extenders" which expired at the end of 2013.