(Bloomberg View) -- In his latest attempt to find the money to repair the U.S.'s decrepit roads and bridges, President Barack Obama is proposing to raid the overseas bank accounts of corporate America. Inevitably, because it involves the U.S. tax code, the plan is not without its absurd aspects. But it could point the way toward making tax policy more sensible.

Obama's budget proposes to tax the roughly $2 trillion in earnings that U.S. businesses are holding overseas at a one-time rate of 14 percent, and to direct the resulting revenue toward public-works projects. The tax rate for new overseas earnings would then be set at 19 percent, 16 percentage points below the current top rate for domestic earnings, regardless of whether companies bring the money back to the U.S.

This isn't the worst such plan. It would discourage companies from continuing to stash their cash abroad in the hope that Congress will eventually give them another "tax holiday."

And infrastructure investment is a prudent way to spend the one- time revenue boon. Plus, it would shore up bridges and rail lines that, in some cases, are in dangerously poor shape.

The plan's second component, meanwhile, acknowledges the deeper problem that leads businesses to this strange situation in the first place. Unlike most industrialized countries, which tax only domestic earnings, the U.S. compels companies to pay taxes on their worldwide earnings. They receive credits for taxes paid to foreign governments and can defer what they owe on overseas income until the money is brought back into the U.S.

This has a number of distortive effects. Most obviously, it discourages companies from bringing money home to pay dividends or make new investments. It also encourages them to take on debt, leads to burdensome compliance costs and outlandish legal trickery, and makes U.S. businesses less competitive in foreign markets.

Obama's plan to tax new foreign earnings at a reduced rate implicitly recognizes the foolishness of this system. Yet it fails to follow this insight to its logical conclusion: Abolish most taxes on overseas earnings altogether.

David Fuller's view

All this makes sense to me.  Governance Is Everything, as I never tire of saying.  US tax policies remain a problem for corporations and GDP growth.