House Transportation Plan Uses Elements that CRFB Highlighted
Here at CRFB we spend a lot of time reviewing responsible options to offset the cost of new bills and have provided many to lawmakers. So when current Ways & Means Chairman Paul Ryan (R-WI) announced an $8 billion transportation package to extend the life of the Highway Trust Fund until the end of the year, we were pleased that almost all of the savings ideas came from options we had previously identified as areas of consensus between former Ways & Means Chairman Camp's Tax Reform Act of 2014 and the President's Budget.
Many of the tax compliance ideas, dealing with mortgages, filing dates, an estate tax loophole, and a statute of limitations, were included in both plans. Three of the four were also in our PREP Plan as a way to pay for the tax extenders at the end of last year. And the single largest source of funds, to continue devoting some of current TSA fees to deficit reduction, had not been included in any previous legislation (that we are aware of) before we suggested it in The Road to Sustainable Highway Spending.
| Offsets in House Ways & Means Transportation Plan | |
| Policy | Savings/Costs (-) |
| Extend current budget treatment of TSA fees from 2023 to 2025 | $3.2 billion |
| Require lenders to report more information on outstanding mortgages | $1.8 billion |
| Close an estate tax loophole about the reporting of property | $1.5 billion |
| Clarify the statute of limitations on reassessing certain tax returns | $1.2 billion |
| Adjust tax-filing deadlines for businesses | $0.3 billion |
| Allow employers to transfer excess defined-benefit plan assets to retiree medical accounts and group-term life insurance | $0.2 billion |
| Equalize taxes on natural gas fuels | -$0.1 billion |
| Total | $8.1 billion |
Source: House Ways & Means Committee
Congress needs to find $8 billion to fund the Highway Trust Fund until the end of the year, because highway revenues have generally fallen short of highway spending since 2001, resulting in a shortfall of nearly $175 billion over the next ten years. According to press reports, the Senate may have a counter proposal.
Although the House plan represents a responsible set of offsets for a short-term highway plan, ultimately policymakers need a longer-term plan to align highway spending and revenue. Our plan, The Road to Sustainable Highway Spending, would couple a short-term fix with a tax and transportation reform process – and would back up that process with an automatic gas tax increase and spending limit if revenue and spending were not brought in line another way.
A similar process and enforcement mechanism could and should be added to the House plan to ensure the highway shortfall is addressed. Even if it isn’t added, passage of a short-term patch must be followed immediately by discussion of a responsible long-term fix.
