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Administration Assembling Infrastructure Plan That Puts Cost Burden On States,Could Lead To Higher Taxes

by Countable | 12.11.17

What’s the story?

The Washington Post reports that the Trump administration is working to put the final touches on a massive infrastructure plan, a policy priority that has gotten sidelined due to health care and tax reform. But the details that are emerging may concern lawmakers and tax payers on both sides of the aisle, since they involve placing the majority of the burden for funding projects on the states, who may be forced to raise taxes.

A central controversy in the GOP tax reform plan is the removal of the state and local, or SALT, tax deduction, particularly in blue states with high local tax rates. The administration’s plan would incentivize states to raise up to 80% of the necessary revenue for infrastructure projects. The administration is only planning on covering $200 billion of the $1 trillion worth of spending outlined in the plan.

According to the Post, "Jurisdictions could raise their gas or sales tax rates, for example, or increase revenue flowing to infrastructure projects in a variety of other ways, such as imposing new tolls on roads or selling off existing assets to the private sector to generate money for new projects."

Democratic lawmakers in states with higher tax burdens are likely to resist a plan that involves potentially raising state and local taxes even further in order to capture the federal funds. A Democratic infrastructure plan distributed earlier this year involved more than five times the level of federal investment, and a significantly lower percentage of investment by the states.

Republican lawmakers are likely to resist the raising of taxes on principal, as well as resist a major federal spending package in light of deficit concerns. The White House maintains that raising taxes is only one of the options for raising revenue, and that Republicans will respond positively to the "fiscal responsibility" of the plan.

What do you think?

Do you support a federal infrastructure plan that places the vast majority of the funding burden on states? Do you think the balance should be different? How do you think states should raise the money to cover their share, whatever that may be?

Tell us in the comments what you think, then use the Take Action button to tell your reps!

— Asha Sanaker

(Photo Credit: Wikimedia / Creative Commons)

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