(April 2, 2013) – US President Barack Obama has a solution to rebuild America’s deteriorating infrastructure without tacking the (entire) bill onto the deficit: foreign pension assets.
The White House has rolled out details of the three-pronged “Rebuild America Partnership” for encouraging private investment in US infrastructure, which was first announced in February during Obama’s state of the union address.
The plan includes reforming the Foreign Investment in Real Property Tax Act (FIRPTA) to allow foreign pension funds roughly the same exemptions as most domestic plans receive. “Infrastructure assets can be attractive investments for long-term investors such as pension funds that value the long-term, predictable, and stable nature of the cash flows associated with infrastructure,” the White House release said. “Under current law, gains of foreign investors from the disposition of U.S. real property interests are generally subject to US tax under FIRPTA.”
According to the proposal document, foreign investors including major pension funds regularly cite FIRPTA as an impediment to investing in US infrastructure and real estate assets. Obama has called on Congress to change that.
“[I’m] proposing a Partnership to Rebuild America that attracts private capital to upgrade what our businesses need most: modern ports to move our goods; modern pipelines to withstand a storm; modern schools worthy of our children,” Obama said in his state of the union speech. “Let’s prove that there is no better place to do business than the United States of America. And let’s start right away.”
No bills have been announced in connection with the plan as of yet.