INFRASTRUCTURE FINANCING Th ere would be a relationship between the number of RIBs purchased, and the amount of foreign earnings a multi-national company could remit back to the United States, tax-free. Assume a 2 to 1 ratio, i.e. for every two RIBs purchased ($2,000,000 total), a company could remit $1,000,000, without having to pay the 35 percent income tax on the remittance. Th ere is an additional benefi t that, like T-Bonds, RIB interest is tax-free. A corporation therefore has a very strong incentive to purchase RIBs and remit off shore cash to invest in its U.S. operations. Th at translates into improved economic effi ciencies and more jobs for Americans. Infrastructure Bank Th e cash generated by the sale 22 | Mass Transit | MassTransitmag.com | APRIL/MAY 2017 of RIBs creates a U.S. Infrastructure Bank. Th ese funds can be disbursed in various Cash generated by the sale of RIBs creates a U.S. Infrastructure Bank, which could be disbursed in various ways. ways. Th e Democrats’ general preference would be that the federal government fund infrastructure, versus using P3s. Th e Republicans, especially President Trump, would prefer P3s, with a split of 80 percent private, 20 percent public money. For arguments’ sake, let’s assume a 40/60 public private split, knowing full well in the legislative sausage-making process, changes will happen. Which entities will be permitted to borrow funds from the Infrastructure Bank? A case can be made for private corporations being able to borrow funds, but that would diminish the multiplier eff ect. A stronger case can be argued that the Infrastructure Bank should be solely for federal contributions. Another question revolves around the interest on RIBs. How will the interest coupon be paid? Th en there are the bonds themselves. Will the federal government “forgive” the bonds For more information, visit www.MassTransitmag.com/11211076
MassTransit_AprilMay_2017
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