Deficit Panel Proposes AGC-Recommended 15 Cent Gas Tax Increase

On November 9, the co-chairs of the National Commission on Fiscal Responsibility and Reform laid out a preliminary proposal to cut the federal deficit by hundreds of billions of dollars.  The sweeping proposal - which has garnered opposition from liberals, labor unions and conservatives, including most members of the commission itself - includes several items related to the construction industry, including the AGC-endorsed recommendation to increase the federal gas tax.  The co-chairs and members of the commission made it clear that the proposal was just a starting point endorsed by only the co-chairs. The commission report will be official only if supported by 14 of 18 commission members. In addition to joining other transportation stakeholders in sending a letter to the commission in support of a proposal by Senators Tom Carper (D-Del.) and George Voinovich (R-Ohio) to increase the gas tax by 25 cents, AGC sent a detailed letter to the commission recommending a 25 cent gas tax increase to be divided between deficit reduction and the Highway Trust Fund.  AGC has and will continue to meet with the members of the commission in advocating for the increase to be included in the commission's final report, due December 1. The draft proposal also calls for cutting billions of dollars in domestic and military spending and remaking the tax code.   Spending cuts of note to the construction industry are:  the termination of low-priority Army Corps of Engineers construction projects (beach erosion and rural water treatment program run by the Corps); cuts to the U.S. Embassy construction budget (largely in security reduction);  elimination of runway expansion and capital investment grants to large and medium-sized hub airports through the FAA's Airport Improvement Program; and an increase in the Inland Waterways Trust Fund fuel tax to cover all costs of construction and maintenance.  The plan would also ban Congressional earmarks. On the tax code front, the plan would end or cap a wide range of tax breaks including the deduction for home mortgage interest and dependent children.  The plan calls for a higher tax rate on capital gains and dividends while offsetting that increase by lowering individual rates.  The plan would also lower the top corporate tax rate of 35 percent to as low as 26 percent. In an attempt to tackle the problems with Social Security, the plan calls for a gradual increase in the retirement age to 68 by 2050 and 69 by 2075, a reduction of Cost of Living Adjustments, and cutting benefits by changing the current benefit formula.  The plan also seeks to address the Medicare "Doc Fix" through various payment reforms, cost-sharing and malpractice reform.