Pennsylvania trucking torn between tax hike and smooth roads

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A bipartisan congressional delegation was scheduled to travel up impeccably paved Pennsylvania Avenue from Capitol Hill to the White House Monday for the first official discussions on the Biden administration’s already controversial infrastructure plan.

The ambitious strategy that Biden unveiled earlier this month at a union hall outside Pittsburgh has a price tag of around $2 billion and an expansive view of “infrastructure” that goes beyond the typical notion of putting people to work fixing bumpy roads and rusty, deteriorating bridges.

Business interests and their Republican allies in Congress have responded that they are certainly all for improving the transportation infrastructure that they rely upon for logistics; however, the method of payment in the form of an increase in the nation’s corporate tax rate had been deemed a non-starter before Biden even arrived in the Steel City.

“As we slowly emerge from the economic catastrophe caused by COVID-19, American businesses are at a pivotal point in our nation’s history,” said Jay Timmons, president and CEO of the National Association of Manufacturers. “Manufacturers can, and should, lead the economic recovery in the wake of the pandemic. But…increasing the tax burden on companies in America means fewer jobs.”

Trucking looks like one industry that would have much to gain or lose – or both – in the infrastructure plan. The dilemma facing Pennsylvania carriers is that while better roads are a definite plus, the higher corporate tax rate that Biden is seeking will impact the bottom lines of both trucking companies and their customers.

“As an industry that depends every day on safe and efficient roads, we are happy to have transportation infrastructure funding front and center in the national discussion as a result of the president’s proposal,” said Rebecca Oyler, the new president and CEO of the Pennsylvania Motor Truck Association (PMTA). “We do have some concerns with the proposal as drafted.”

The PMTA’s concerns revolve around the wide scope of the Biden plan, which goes well beyond “roads and bridges” and drifts off into other areas, such as expanding broadband service in rural areas, upgrading Veterans Administration hospitals and providing training for green energy jobs.

Congressional Republicans took to the airwaves Sunday morning to point out their conclusion that only a relatively small percentage of funding would actually go into transportation. “Six percent (of the spending) is actually focused on the kind of infrastructure that there is bipartisan support for, so I would urge Democrats, let’s focus on that,” Rep. Liz Cheney (R-WY) said on CBS’ “Face the Nation” Sunday.

In 2017, President Donald Trump had slashed the national corporate tax rate from 35 percent to 21 percent. Oyler, who joined the PMTA in February after serving as state Legislative Director for the National Federation of Independent Business, echoed the idea that raising the rate from 21 percent to 28 percent would be an economic mistake, even if for a good cause.

“There are better ways to close the infrastructure funding gap,” Olyer told Pennsylvania Business Report. “Raising broad-based taxes could hamper economic growth at a particularly bad time when many businesses are still struggling to recover from the pandemic. This is especially true for Pennsylvania businesses, which already pay the second-highest state corporate net income tax in the nation.”

The American Trucking Associations (ATA) said recently that chronic underfunding of infrastructure was a direct result of the struggles of the federal Highway Trust Fund, which provides revenues for road maintenance through an excise tax tacked on to the cost of a gallon of gasoline or diesel fuel. The charge has not been raised since 1993, and with cars getting better mileage and more electric vehicles on the road, the Congressional Budget Office last year predicted insolvency as early as this year – and that was before COVID-19 shut down the daily commute for much of 2020.

“We do not believe the administration’s funding proposal is politically tenable nor a reliable long-term solution to the shortfall facing the Highway Trust Fund,” said ATA President and CEO Chris Spears.

Washington has been reluctant to ratchet up a new fuel tax on American motorists and truckers. In fact, Pennsylvania Gov. Tom Wolf last month proposed phasing out the fuel tax as the primary source of funding for infrastructure. Wolf did not provide an alternative solution, although ideas getting nationwide attention include new fees on energy efficient vehicles, an increase in highway and bridge tolls, and a “vehicle miles travelled” progressive tax, which is based on the actual miles a vehicle covers during the year and has its own thorny issues of recording and verification.

Political observers expect plenty of compromise, if not outright horse trading, on the road to infrastructure overhaul. Monday’s White House discussions are likely to produce pledges for cooperation and possibly even some progress in finally getting the infrastructure show on the road, even if it has some potholes of its own.

“We would love to see a transportation bill in Washington that targets roads and bridge improvements and includes a funding mechanism that’s more aligned with this goal,” said Oyler. “And we know the proposal is the start of a long process of give and take in Washington and likely won’t be the final product.”