How Trump's Plan For Taxes And Infrastructure Is Really A Resurrected Obama-Era Concept

Following the failure of the healthcare bill, the Trump administration is planning a bipartisan effort to concurrently drive tax reform and infrastructure spending, Axios reported Monday.

While the approach would herald a major shift in White House strategy, it's far from novel — even in its details.

“The idea of funneling a 'couple hundred billion' dollars of federal money, as Treasury Secretary [Steven] Mnuchin put it last week, into infrastructure financing is not new, and the thinking has long been that a deemed repatriation tax of up to 10 percent on foreign derived earnings would be the most likely ‘pay-for,’” Height Securities said Tuesday.

House Speaker Paul Ryan, a Wisconsin Republican, and Senate Democratic Leader Chuck Schumer of New York will spearhead negotiations in a near replay of their 2015 debate over the same issue.

What’s The History?

The Obama administration’s draft of the Tax Reform Act of 2014 ultimately failed to pass, but Schumer and Ryan carried its spirit deep into the following year. The legislators bargained for a one-time tax break on international profits brought to the U.S. in exchange for the financing of transportation projects.

The deal would have given Republicans their tax decrease and Democrats their desired allocation.

While Schumer and Ryan were united on the general idea, their parties were hesitant to back them, and details of the compromise — tax cut and budget figures — were ultimately left unsettled.

"It's been a slog, and we're not close, and the reason is we need a robust highway increase to justify the whole endeavor," Schumer told CQ Roll Call in October 2015. "Chairman Ryan I think would like to get there, but he is constrained by all kinds of Republican rules and politics, so it's hard."

What To Expect

Axios' report suggests that the legislators will revisit their debate, but Height isn't surprised.

“We’ve long maintained that tax reform was the most likely vehicle to drive the majority of an infrastructure funding plan," analysts wrote in reference to their December 16 report.

iShares S&P Global Infrastructure Index IGF has risen 8 percent since the start of the year on optimism surrounding federal investments.

Related Links:

The True Cost Of Fixing America's Infrastructure

How To Trade The Expected Expansion In U.S. Infrastructure Spending