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Oregon Democrat shelves fuel tax increase in favor of higher taxes on corporations and top income earners.

COURTESY PHOTO - U.S. Rep. Earl Blumenauer, D-Ore., backs President Joe Biden's plan to boost federal spending on public works projects and human caregiving programs. He also backs Biden's call for higher taxes on corporations and top-income earners, rather than increased fuel taxes.U.S. Rep. Earl Blumenauer has embraced President Joe Biden's proposals to increase spending on public works projects and human support programs — and how Biden proposes to pay for them.

The Oregon Democrat, one of the senior members of the House's tax-writing committee, says he will shelve proposals he has offered to raise federal fuel taxes over the past decade. Biden has proposed instead to raise taxes on corporations and high-income earners to pay for his American Jobs Plan, which he has tentatively whittled from $2.2 trillion to $1.7 trillion over 10 years.

The federal fuel tax has been at 18.4 cents per gallon since 1993. Blumenauer proposed in 2013, 2015 and 2017 — when Republicans controlled the House — to raise it 5 cents for three straight years. Two years ago, after Democrats won a majority, he proposed to raise it 5 cents for five straight years, then link it to inflation. All the proposals failed to advance.

Meanwhile, Oregon and other states have raised their fuel taxes — Oregon's rate is now 36 cents per gallon — and Oregon has experimented with alternatives focused on drivers' mileage. Oregon, like other states, saw fuel-tax collections decline at the onset of the coronavirus pandemic and the resulting economic downturn.

Blumenauer joined the House Ways and Means (tax) Committee in 2007, after he spent a decade on the Transportation and Infrastructure Committee.

"Putting a tax on gallons of fuel consumed is not sustainable," Blumenauer said. "The president has made a commitment that he is not going to raise taxes on people who make less than $400,000. So I think we just ought to take it off the table. It would be a distraction.

"People who have never stepped up over the course of the past 13 years would seize upon this (increase), not the broader themes and priorities."

Blumenauer spoke during a virtual forum sponsored May 20 by the Volcker Alliance, which the late Paul Volcker — a former Federal Reserve chairman — founded to promote solutions to public problems.

Among Biden's proposals are to raise the corporate income tax from 21% to 28% — still short of the 35% rate before a Republican-backed overhaul of the federal tax code lowered it in 2017 — and set a global minimum tax of 15% on corporate profits. The latter would hinge on cooperation with other nations to deter businesses from shopping for low-tax havens.

Biden also has proposed to raise taxes on high-earning households, particularly on capital-gains income they get from the sale of an asset such as stock. He also wants to boost enforcement of tax laws by the Internal Revenue Service to collect as much as $700 billion that is going unpaid.

Republicans have said they will resist changes to their 2017 tax overhaul, which got no Democratic support in either house of Congress.

"But there is significant public support for all of them. The public believes rich people should pay the taxes they owe," Blumenauer said.

"We cannot afford to wait any longer to step up and make these changes. The Ways and Means Committee has a wide range of these options. The administration has expressed a willingness to adjust them going forward.

"The funding mechanisms that have been proposed by the administration, which we strongly support, shelter the vast majority of American families while making these investments."

Blumenauer is one of three Oregon members of Congress with a direct voice on this issue. Democratic Sen. Ron Wyden leads the Senate Finance Committee, the counterpart to the House tax committee. Democratic Rep. Peter DeFazio is chairman of the Transportation and Infrastructure Committee.

Broader definition

Blumenauer said he also embraces Biden's broader definition of "infrastructure" to include job training, child and elder care and public works such as water and sewer systems and broadband networks.

"It is not going to be just roads, bridges and transit systems," he said. "This is the first time I have been in Congress that we have an administration that is committed to doing something with infrastructure and stepping up with proposals they are willing to have us enact to pay for it."

Polly Trottenberg, the new U.S. deputy transportation secretary and a former New York City transportation commissioner, said previous infrastructure plans have overlooked investments in electric-charging stations and other projects to reduce fossil-fuel consumption and improve energy efficiency.

She also said training for future workers and caregiving for children and older people who depend on those workers should be part of the mix.

"That human element is keeping our country, our states and our cities thriving," she said.

Biden's plan proposes $25 billion for work to reconnect urban neighborhoods, especially those populated by racial and ethnic minorities and low-income households, split apart when the interstate highway system was built in the 1950s and 1960s.

Blumenauer has made no secret that he would like to secure some of that money for Albina, which was split when Interstate 5 was built through North Portland in the early 1960s.

"It would restore the historic Black community where infrastructure was driven through it without sensitivity to the impact on the people who were left," he said. "They just tore it up. This would be tailor-made to be able to heal and repair it."

Thinking big

Marc Morial, president of the National Urban League, said Biden has gone big — and so should Congress — unlike after the Great Recession.

"Broadband is today what the interstate highway system was in the 1950s and 1960s. It is essential," he said.

"It took us 10 years to get back to where we were from a jobs standpoint. If this economy is going to build back faster, better and more equitably, there is no better way to invest in the American economy than to invest in a broad-based infrastructure plan."

Robert Poole of the Reason Foundation argued for greater consideration of user fees, long-term financing such as revenue bonds and public-private partnerships to pay for needed improvements in public works. But he agreed with Blumenauer that the fuel tax is outliving its usefulness, especially since cars have become more fuel-efficient or all-electric.

"The gas tax is running out of steam," Poole said. "Tolls could become the first step in a national transformation from per-gallon taxes to per-mile charges."

Oregon has earmarked higher driver and vehicle fees, but generally not fuel taxes, to repay bonds issued for road and bridge projects over the past two decades.

"Long-term financing of long-term infrastructure is basic public finance and good government policy that we need to rely on more when we face big crises in the needs for infrastructure," Poole said.

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