You May Not Be Able To Drive 55

The United States Highway Trust fund includes a transportation fund that was established to fund highway road construction and repairs. This fund is set to run out of money by the end of August. Without a solution, major highway construction and repair projects will be, or will continue to be, on hold in many states. Members of Congress, including both Republicans and Democrats, understand and are looking to resolve the problem by the July 4 recess of Congress.

One consideration to resolve the issue is a one-time tax break in the form of a tax holiday for repatriating earnings from overseas, an idea proposed by both Senate Democrats and Republicans. This tax holiday would be estimated to generate $19.6 billion in tax revenue over the first two years, but would then end up costing an estimated $115.6 billion over the next 8 years, according to the Joint Committee on Taxation. For this reason, and because of the appearance that the United States would be making such tax holidays a regular part of the tax system, the Joint Committee on Taxation does not favor this option.

Those companies with overseas profits would be beneficiaries of the tax holiday, so those companies holding the largest cash reserves outside of the United States (Apple, Cisco Systems, Inc. and Oracle Corp.) would be the largest beneficiaries of the tax holiday. Without this solution, it is speculated, by Washington Analysts, that the Highway Trust Fund would be funded, although probably by a much lower amount. So, is the question for Congress to answer regarding the tax holiday: "Is the bird in the hand better than the pothole in the road?"

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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2019 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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