December 1, 2016

Another Trump fake: his public works program

Washington Post - The Trump plan that emerged late in the campaign would give private investors an 82 percent tax credit to pump money into projects, credits that theoretically would reduce their need to profit from the investment. Trump said that his plan is a win-win for taxpayers because tax dollars lost by granting the credits would be recouped by taxing the wages of people put to work on the projects and from taxes paid by contractors hired to do the work.

The second part of the Trump plan involves repatriation, a much-talked about idea to lure home $2.5 trillion in cash stashed overseas by U.S. corporations. It is an idea championed by Rep. John Delaney (D-Md.), but in the Trump plan it comes with a twist.

Trump has proposed reducing the rate companies would pay to bring the money home from 35 to 10 percent. Those companies then could invest slightly more money in infrastructure projects, gain the 82 percent tax credit and effectively erase that 10 percent tax.

“We believe that this tax credit-assisted program could help finance up to a trillion dollars’ worth of projects over a ten-year period,” the Trump campaign said in an Oct. 27 white paper. The Trump transition team did not respond this week when asked whether his thinking had evolved since Election Day.

None of the longtime transportation analysts interviewed for this report shared Trump’s confidence that tax credits to private business would generate $1 trillion for infrastructure projects.

“In certain parts of the country, those kinds of private financing work,” said Ed Mortimer, infrastructure director at the U.S. Chamber of Commerce. “In other parts of the country we need to use general funding.”

Analysts also questioned Trump’s belief that the outlay from tax credits would be recouped in taxes collected from construction workers and from the profits of contractors. With unemployment down to 4.9 percent — many construction workers already are back on the job, and most contractors are engaged with post-recession jobs — the projected net gain in income taxes seems likely to fall short.

The Capitol Hill crowd — members of Congress and lobbyists — has been talking for years about the billions of dollars in private capital that has been “sitting on the sidelines” while infrastructure projects want for funding.

The reality, however, is that investors expect a return for their money, and very few projects promise to make money. The most common way to profit is through tolling roads or bridges. But while tolling could work in high-volume urban settings, investors are not going to flock to build roads and bridges in vast stretches of rural America.

The Congressional Budget Office said last year that just 26 private-investment projects were completed or underway nationwide.


1 comment:

Anonymous said...

Nattering nabobs of negativity!