The Senate on May 17, 2005, passed a highway funding reauthorization bill (H.R. 3) by a vote of 89 to 11. The legislation has an overall projected cost of $295 billion over six years and includes tax provisions that would raise a total of $20 billion in revenue over ten years. Excise tax reform and simplification provisions in the legislation have a ten-year cost of $1 billion.
Key revenue raising provisions include clarification of the economic substance doctrine (projected to raise $16 billion over ten years), requiring partial payments with offer-in-compromise submissions, application of earnings stripping rules to partners which are C corporations, denying deductions for punitive damages, imposing mark-to-market requirements on individuals who expatriate, repealing the Code Sec. 470 exception for qualified transportation property, freezing the interest suspension rules for listed transactions, whistleblower reforms, denial of deductions for certain fines and penalties, and modifications of the controlled foreign corporation / passive foreign investment company coordination rules.
The revenue raisers were used to raise the highway spending amounts over the $284 billion approved by the House on March 10, 2005, and also over the $284 spending limit demanded by the President. Many of the revenue raisers were proposed by the Senate in 2004 legislation and rejected in conference. Pressure will be exerted in conference to pare the spending limit down to the $284 billion figure. The President has threatened to veto any legislation that exceeds that amount, although the vote in the Senate was by a veto-proof margin. Current highway funding authority expires on May 31, 2005.