Opinion: Finding new revenue for infrastructure
Congresswoman Carolyn B. Maloney with workers during construction of the Second Avenue subway. Photo courtesy of Congresswoman Maloney's office
For decades, America has been neglecting its infrastructure. Year after year, the American Society of Civil Engineers (ASCE) warns us that the costs of repairing the damage is skyrocketing. Every four years, they issue a report card, with the 2017 report estimating the cost of fixing our roads, dams, airports, and water and electrical systems at $4.6 trillion. While New York performed better than the nation as a whole, scoring a C- compared to the national grade of a D+, we still clearly have work to do to bring up our grade.
The ASCE report is limited to the cost of repairing existing infrastructure without considering the costs of investing in the future. But, building anew is needed to benefit our economy, our commuters, and our city with projects like a new Hudson River tunnel, high speed rail in the Northeast Corridor, and the full build Second Avenue subway.
The Second Avenue subway is truly a success story that shows how important it is for us to expand our transportation. Since Phase 1 officially opened for business on January 1, 2017, ridership has risen 42 percent as people recognize how convenient it is to have a one-seat ride between the Upper East Side and Times Square, lower Manhattan and Brooklyn.
It has also provided relief to the Lexington Avenue line where crowding has dropped by 26 percent overall and by 40 percent during the morning rush. None of this progress would have happened, however, without the $1.3 billion in federal funding that I am proud to have helped secure. If we are going to tackle our country’s huge infrastructure repair and do things like building the remaining three phases of the Second Avenue subway, then we need to find new ways for the federal government fund these investments.
Unfortunately, most of the ideas coming out of the Trump administration seem to involve public/private partnerships, which are not the best way forward. The only public/private partnerships that work are those where a dedicated revenue stream can be identified. Most mass transit systems operate at a deficit, so a great project like the Second Avenue subway will not qualify or get the funding it needs. But the Second Avenue subway, like many mass transit projects, is a public good, and the type of service that our government should be providing.
We need another source of revenue. Right now, there is estimated $2.5 trillion of American subsidiaries’ profits sitting in accounts overseas because companies do not want to pay the 35 percent tax they would face if they brought this money into the U.S. We need to change that.
One proposal from Martin Tuchman, a highly-successful entrepreneur, that Congress should consider would create a new incentive to invest this money in job-creating infrastructure projects. For every dollar repatriated, 25 cents would be required to be invested for a period time in national infrastructure funds for projects across the country, five cents would go to the federal government as taxes and the company would retain the remaining 70 cents. A program like this would incentivize companies to bring back anywhere from $500 billion to $1.2 trillion for infrastructure. While this won’t fix every problem, it is an important start and could give us a full-build Second Avenue subway.
In 2004, Congress offered a one-time tax holiday to encourage companies to repatriate their overseas profits; however, there was no requirement that those funds be used to create jobs. As a result, many companies took advantage of this lower tax rate, but few actually invested in job-creating projects.
This time needs to be different. By requiring that a portion of any repatriated dollar be invested in infrastructure projects, we can find the revenue we need to start upgrading and expanding our country’s declining infrastructure.
Congresswoman Carolyn B. Maloney represents the 12th Congressional District in New York.