A Poor Way to Finance the Highway Trust Fund

A bad idea in both President Obama’s Fiscal 2015 budget and Ways and Means Chair Dave Camp’s (R-Mich.) tax reform plan is to use one-time revenue from changes to the corporate tax system to shore up the Highway Trust Fund.

Unless lawmakers do something, later this year the largest part of the Highway Trust Fund — the Highway Account — will be unable to meet all of its obligations. The Congressional Budget Office recently projected that the entire trust fund would become insolvent in 2015.

A bad idea in both President Obama’s Fiscal 2015 budget and Ways and Means Chair Dave Camp’s (R-Mich.) tax reform plan is to use one-time revenue from changes to the corporate tax system to shore up the Highway Trust Fund.

Unless lawmakers do something, later this year the largest part of the Highway Trust Fund — the Highway Account — will be unable to meet all of its obligations. The Congressional Budget Office recently projected that the entire trust fund would become insolvent in 2015.

However, using short-term revenues from tax changes on unrelated corporate profits earned abroad is not a good approach and would simply delay needed action to give the trust fund long-term solvency.

A better approach would be to raise the motor fuels tax on gasoline, the main source of revenue for the trust fund. The tax has not been increased since 1993 and has not kept up with inflation. In addition, better fuel-efficiency standards have hurt revenue.