Legislation to Fund Local Infrastructure Gains Support

Congressman John Delaney introduced legislation recently to establish a national infrastructure fund that could be used to finance loans to local governments to build infrastructure projects through public private partnerships.  As reported by the Gazette:

Delaney’s bill would establish the American Infrastructure Fund, an entity separate from the government, with its own board of trustees, that would issue $50 billion of infrastructure bonds to corporations, with a 50-year term and a fixed interest rate of 1 percent, according to the bill text.

The amount that the corporations would be allowed to repatriate for each dollar spent in bonds would be set by a “reverse Dutch auction,” the bill states. For example, a 1:4 ratio would allow the corporations to repatriate $4 tax-free from overseas earning for each $1 purchased in bonds.

U.S. corporations currently had overseas earnings of $1.9 trillion in 2012, according to a May 2013 report by research firm Audit Analytics. Since tax rates to bring the money back into the U.S. are so high, corporations often keep their money abroad, Delaney said.

Local governments could apply to receive a loan or guarantee for transportation, energy, communications, water, and education projects. The government would have to pay back the loan at market rate, the bill states.