WASHINGTON Feb 7 As Washington struggles
to find ways to pay for highway and road repairs, the U.S.
Senate is considering relying on a wide array of revenue sources
that go far beyond the traditional gas tax, including measures
such as changes in how inherited retirement accounts are taxed.
On Tuesday, the Senate Finance Committee approved
legislation for funding highway and road repairs that is a
radical departure from the financing bill currently in the House
Republicans, in the minority in the Senate, criticized it
for using revenues collected over a decade for spending within
two years and relying on funds not directly related to
"When we cannot find more revenue from the...usual sources,
we have focused on funding that bears a nexus to
transportation," said Senate Finance Committee Chairman Max
Baucus. "We have therefore explored funding from transportation
and energy sources. These include revenues from import tariffs
on foreign cars."
The Senate bill would mostly rely on extending the gas tax,
which goes into trust funds for highways and transit, through
September 2015. But with the Congressional Budget Office
recently projecting the trust funds will soon run out of money,
leaders are digging for dollars in other areas.
The Republican-led House Ways and Means Committee last week
passed its version of transportation funding that would bridge
trust fund gaps with revenue from energy leasing and production.
The last comprehensive transportation spending legislation
expired more than two years ago, and the U.S. government has
since doled out money to states via piecemeal measures. The
current temporary funding expires March 31.
In addition to the gas tax, the Senate bill would take money
from an account to remediate leaks from underground storage
tanks and end a tax credit for a paper-making byproduct known as
It also would use penalties assessed for large vehicles that
do not meet fuel economy standards, revoke passports of
individuals owing more than $50,000 in back taxes, and levy
federal payments to Medicare service providers delinquent on
Other elements would change how the debt of corporate
subsidiaries is treated under tax law and allow the Internal
Revenue Service to levy Thrift Savings Plans for tax
Republicans particularly opposed part of the bill that would
compress taxable distribution of inherited Individual Retirement
Accounts into a five-year period to raise more than $4.6
billion. Currently, an heir to an IRA can spread out
distributions over his or her entire life, meaning that little
tax money might be collected.
"Half of the total cost of the bill would be offset by a
brand new tax change that has nothing whatsoever to do with
highways," said Senator Jon Kyl, who is also the Republican
Baucus said he will look into replacing the provision with a
different revenue source before the full Senate votes on it.
AAA, the drivers' group, considers raising the gas tax "the
most sensible option," and one which is off the table, said
Peter Nonis, the group's manager of congressional relations.
"Given that fact, we support efforts in the House and Senate
to find revenues to enact an authorization bill this year," he
said. "I think that even the policymakers promoting these
funding items would tend to agree that they do not represent a
long-term solution to fund this program."
Senator Orrin Hatch, the most powerful Republican on the
committee, who attempted to amend the bill to approve a
contentious pipeline, said, "We'll have to look to the future to
get back on the road to a sustainable long-term highway
Even enacting a short-term solution would require
complicated political maneuvering amid rancorous partisan
divisions in an election year. Both chambers must pass bills,
and then reconcile them into final legislation for President
Barack Obama to sign.
Some of the Senate's measures raise questions about
sustainability, because Congress will only be able to tap the
sources once, said Erich Zimmermann, senior policy analyst for
Taxpayers for Common Sense.
"They're not fixing the systemic problems," he said. "These
provisions won't be there in two years. Then what?"
MEASURES TO WHET MUNICIPAL BOND-BUYING INTEREST
The Senate committee also approved measures that would
affect the municipal bond market.
The bill would allow state infrastructure banks to sell
tax-credit "TRIPs" bonds that Senator Ron Wyden has long
trumpeted, and raise the limits of debt small issuers can sell
to $30 million per year from $10 million through 2013.
It also would exempt interest paid by private activity
bonds, issued for projects outside the purview of general
obligation bonds, from the alternative minimum tax and exclude
private activity bonds issued for water infrastructure from an
annual cap on how many of those bonds can be sold.