McConnell rules out linking highway bill to overseas tax reform

Senate Majority Leader Mitch McConnell (R-Ky.) on Thursday ruled out using revenue from taxing U.S. companies’ foreign profits to pay for a multi-year highway bill, something Senate Democrats have discussed with House Republicans.

McConnell said any revenue collected from moving to a “territorial” tax system should not be used to pay for transportation projects.

{mosads}“Two separate issues,” he said. “There’s been a lot of focus on going to a territorial system. I might well be enthusiastic about that, but I view it as a totally separate track unrelated to the highway issue.”

The Senate last month passed a six-year highway bill that included a variety of ways to pay for the first three years of the legislation.

House Republicans, led by Ways and Means Committee Chairman Paul Ryan (R-Wis.), want to negotiate with the White House on tax reform to pay for a long-term highway bill. The House passed a three-month highway bill in July, which the Senate then approved, to give those talks more breathing room.

Ryan and Sen. Charles Schumer (N.Y.), the third-ranking member of the Senate Democratic leadership, have looked at reforming the tax code for corporate profits kept abroad and using the revenue to pay for the transportation bill.

McConnell noted that he and Sen. Barbara Boxer (Calif.), the senior Democrat on the Environment and Public Works Committee, put together $47 billion worth of offsets to pay for the first half of the Senate-passed highway bill. He said it would go to a conference committee with whatever multi-year bill emerges from the House.

But he does not want it to become mixed up in year-end negotiations, when Democrats will be pushing to use the Senate highway bill’s offsets to raise spending caps and tax reform to pay for the highway bill.