On Tuesday, gjohnsit's "wikileaks roundup" made mention of the Clintons' repatriation proposal. This happens to be my baby, I've been blogging about it for the past two congresses because my Representative, John Delaney, (D, MD-06) is the guy on point for drafting the legislation.

His first stab at it was a horrific mess, disturbing in its half assedness, called H.R. 2084, the Partnership to Rebuild America. The Frederick News-Post claimed it would "help pay for a fast-deteriorating national transportation infrastructure without increasing the nation’s debt or raising taxes.”

H.R. 2084:

The bill encourages U.S. companies to purchase these bonds by allowing them to exclude a certain portion of their overseas earnings from taxation. The amount that they are permitted to repatriate for each dollar of bond purchases will be determined by a competitive auction.

The long and short of it was that HR 2084 would create the American Infrastructure Fund (AIF), which would issue loans to states and municipalities in need of infrastructure improvements. The AIF would be funded by a $50 Billion bond auction open to any U.S. Corporation wanting to repatriate foreign held profits. But that would suck for the poor corporations, because they would only be making a mere 1% or so on the bonds. Ah, so to sweeten the deal, the AIF bond auction would allow a corporation to repatriate a multiple of the bond purchase. The exact multiplier is what the auction would decide, but Delaney's original back of the envelope proposal was a 4:1 ratio, so you buy $50 Billion in bonds with money held overseas, and you get to bring in an additional $200 Billion, all of it tax free. With that $50 Billion, the AIF would issue $750 Billion in loans and bond guarantees.

I found a lot to criticize about this bill. All it would do is privatize the debt for infrastructure projects. No state or city will save any money. No taxpayer will be relieved of the cost of the projects. It's just that the interest that the bonds pay will be going into the coffers of corporate America, not John Q. Investor.

The other red flag for me was that turning $50 Billion into $750 Billion in loans sounds a whole lot to me like fractional reserve banking. Oh wait that should be Banking with a capital 'B', as in, governed by Banking regulations. But the AIF was to be a private entity, not subject to Banking Committee oversight.

Now let's crunch the numbers with HR 2084. The amount an American corporation has to pay in taxes depends on how much they already paid the host country for those profits. Shelter countries like the Bahamas have a zero percent tax rate, so the U.S. corporation would be on the hook for the full 35%. For this example, let's assume they've paid an average of 10% to their host country. So they would owe 25% tax on the $50 Billion spent on bonds, and on the extra $200 Billion incentive, so $250B x 0.25.

That's a $62.5 Billion tax break. In order to create a $50 Billion fund.

Thankfully, HR 2084 died.

For the current Congress, Delaney introduced the reincarnation of his former bill, now called H.R. 625, the Infrastructure 2.0 Act. Here, Delaney doubles down, proposing the repatriation of all foreign held corporate profits at a tax rate of 8.75%.

The Infrastructure 2.0 Act establishes deemed repatriation at an 8.75% tax rate for existing overseas earnings. This produces enough revenue to provide an additional $120 billon to the Highway Trust Fund, enough for six years of solvency at increased levels, as well as funding for the creation of a new $50 billion dollar American Infrastructure Fund, which will be leveraged to finance $750 billion in new infrastructure projects

So the new plan is to set a fixed 8.75% tax rate on repatriated funds, and the guess is there's $2 Trillion waiting to come home. That would raise about $170 Billion in taxes. $120 Billion of that would go toward highway funding, and the remaining $50 Billion would start up that damn AIF.

How much would H.R. 625 cost? About a half a trillion bucks in lost taxes. Now one could make the argument that 8.75% of something is better than 35% of nothing. Well, it's only nothing right now because the corporations are just waiting for their decennial tax amnesty.

And then there's the significant amount of money. Even if the AIF issued loans at the same 1% rate that the bondholders were getting paid, it would issue 15 times the bond amount, so in effect 14% yield for the AIF, on a $50 Billion capital investment. [see comments]

O.K. that's the background. During one of the Democratic debates, Hillary mentioned an idea of an "Infrastructure Bank." Her plan would seed the bank with $25 Billion, and then leverage that money into an additional $225 Billion in loans. Sound familiar? Just as soon as she said it, I said "I'll bet it uses repatriated money."

And it did. In an October, 2014 speech she said

“A number of business leaders have been talking to my husband and me about an idea that would allow the repatriation of the couple trillion dollars that are out there. And you would get a lower rate — a really low rate — if you were willing to invest a percentage in an infrastructure bank.”

And there you have it. But wait. In typical dishonest Hillary fashion, she was using an outdated plan for her "public" proposal. H.R. 2084 died in 2014, and Delaney was already drafting the new plan to repatriate the whole ball of wax. The 2014 email shows that she was keen to this already. But her 2016 campaign platform touts a scaled down version of HR 2084, an already defunct idea. What she did was float the idea for tax amnesty without even bringing the subject up.

If you want to venture over to TOP and read my debate night call out and ensuing argument with BrooklynBadBoy, you can see it here.