* Fuel tax increase proposed by Democrat and Republican
* Uphill climb seen for proposal with elections in November
(Adds White House opposition to corporate tax holiday)
By Kevin Drawbaugh and Roberta Rampton
WASHINGTON, June 18 Two U.S. senators on
Wednesday said they want to raise the federal gasoline and
diesel tax by 12 cents a gallon to prevent a fund that pays for
about half of the country's transportation projects from running
out of money in August.
Republican Senator Bob Corker and Democrat Chris Murphy
called for raising the tax 6 cents a year for two years and
linking future fuel tax increases to inflation.
The gasoline tax is now 18.4 cents a gallon, and the diesel
tax is 24.4 cents a gallon.
The tax has not been increased since 1993, and hiking taxes
is politically unpopular ahead of midterm elections in November.
"I know raising the gas tax isn't an easy choice, but we're
not elected to make easy decisions. We're elected to make the
hard ones," said Connecticut's Murphy in a statement.
He and Corker proposed other tax cuts to offset the fuel tax
hike, but made no specific recommendations.
Another approach favored by some lawmakers to replenish the
federal Highway Trust Fund is to give U.S. multinational
corporations a tax break on bringing foreign profits into the
President Barack Obama opposes this idea of a corporate
offshore profit tax repatriation holiday, the White House said.
"The president does not support and has never supported a
voluntary repatriation holiday because it would give large tax
breaks to a very small number of companies that have most
aggressively shifted profits, and in many cases, jobs,
overseas," White House spokesman Jay Carney said on Wednesday.
Corporations lobbying Congress for the repatriation holiday
suffered a setback last week with the defeat of House Majority
Leader Eric Cantor, which undercut Republican support for
Multinationals have sought for years to convince Congress to
endorse the tax holiday, which would let them bring foreign
profits home at less than the 35 percent top corporate income
tax rate. This was attempted before in 2004 under former
President George W. Bush, a Republican.
This time around, the holiday proposal was expected to
resemble the 2004 version - a 12-month, 85 percent deduction for
dividends paid by overseas units to U.S. parent corporations.
Congress's non-partisan Joint Committee on Taxation
estimated this structure would generate $20 billion in federal
revenue as a burst of offshore profits flowed into the economy.
But after the holiday ended, the committee said,
corporations would hold more foreign income offshore expecting
another holiday later on. The committee estimated the long-term
cost to taxpayers would be about $95 billion over 10 years.
(Reporting by Kevin Drawbaugh; Editing by Howard Goller, W
Simon and Lisa Shumaker)