Could tax reform lead to infrastructure upgrade?

More than $2 trillion of overseas corporate profits are stashed away in overseas accounts. Audit Analytics notes that these "indefinitely reinvested foreign earnings" have more than doubled since 2008 (see also this, this and this). 

In response to this cash hoard, the president wants a one- time 14 percent tax on these accounts, earmarked for infrastructure projects, and to allow the funds to be repatriated to the U.S. 

The devil is always in the details, so let's look more closely at them: The six-year, $478 billion infrastructure upgrade to highways, bridges, and public transit in the U.S. would also replenish the Highway Trust Fund. Companies could reinvest repatriated funds in the U.S. without paying any additional tax, aside from the one-time 14 percent levy. For foreign profits earned in the future, the minimum tax would be 19 percent. 

Compare that with the current structure. U.S.-based multinational corporations are taxed at a 35 percent rate on worldwide income. Of course, no one pays that rate. Between inversion deals and those companies that pay no taxes at all, 35 percent is at best a nominal rate. Studies have shown that the effective corporate tax rate is something on the order of 12.6 percent. 

Currently, taxes don't have to be paid on overseas earnings until they are repatriated or paid in a dividend. At least, I think that is what the rules are; the tax code is beyond complicated, and I have precisely zero expertise in such things. But overseas taxes can be deferred indefinitely so long as the earnings are kept abroad.  Yet, keeping the money abroad isn't always advantageous if there are domestic investment opportunities.

The White House proposal is a good start to the debate about taxes. The U.S.'s infrastructure needs are large and growing. The country is way behind Japan, China, Germany and Switzerland. But before we can even think about trying to catch up with those nations, we need to do the desperately needed basic road and bridge maintenance.

Corporate tax reform can also be a positive, so long as the lobbyists don't pry too many giveaways from their friends and future revolving-door contestants in Congress.

I don't want ahead of myself, but maybe we have a good old fashioned political horse trade: Corporate tax reform for infrastructure repairs. Both are long overdue.