Legislation is being introduced in the Senate to give investors in rail infrastructure a 25% tax credit. What do you think of this type of governemt subsidy, after all the rest of us get to make up the lost revenue? Would it be better to give railroads, etc. cash grants so government has more input into how the money is spent?
The Senate bill has broad support from both parties.
Do you know how “infrastructure investment” is defined in the bill? Will it include in-face maintenance? Out-of-face maintenance? New track or capacity increases only?
I’d rather see the 25% tax credit than direct grants. The federal government is an unwieldy object too subject to political whims, single-issue demagogues, selfish consituents, and opportunists to be practical and reasonable in the way it apportions money. Direct grants would end up like the highway bill – something for every important politician, nothing for where it’s really needed.
Perhaps the alternative would be higher use charges for trucks and autos (thus creating more demand for rail services) but the disruption to the U.S. economy – particularly the rural economy – would be fearsome to contemplate.
No, I’m not opposed. Speaking for my 25 years as a railroader I’m cautiously optimistic that Congress may for once be onto doing something that we actually need.
Now I’ll return to my railroad job and let others fume about this being an express-train to national perdition, etc.
S. Hadid
I think I’ll hold comment until all the inept politicians back there butcher the bill to the point nobody recognizes the thing and it dies in committee…
Tax credits are commonly used to help strengthen industries or economic areas of national concern. A recent one that I found beneficial was the research & development tax credit. The advantage of a tax credit is that the government does not send a check to the company. The company gets the benefit by a credit on their next tax return. This means that the work is done and paid for before a credit is given. With the current emphasis on corporate finance - a tax credit is much more likely to generate real results than a grant.
Meanwhile, I will wait until the dust settles before I think about whether this is a good idea or not. It does have possibilities - but the devil is in the details.
dd
Which is quite likely given the ill feelings of many railroad customers and their Senators…
LC
According to information posted elsewhere, this act will provide the 25% tax credit on “new rail track, intermodal facilities, rail yards, locomotives, or other rail infrastructure expansion projects.”
I’m interested in whether it will make railroads invest more in the CREATE projects around here–they’d certainly fit the description!
The template for this idea was the shortline tax credit that passed a few years ago. By most accounts, it was very successful in getting badly needed development funds to regionals and shortlines, although it was expected that more would apply for the grant than actually did.
I support the idea of a Class I infrastructure tax credit, but if we are now at the point of taxpayers indirectly funding rail expansion, it’s be nice if the tax credit was limited to improvements to lines that serve domestic producers. If China et al want rail lines from ports to consumer markets improved for their benefit, then let them pay for it.
Dave:
Do you want China et al to buy UP or BNSF?
That certainly would be them paying for it.
ed
Well, you know the old saying…
Why buy the cow when you can get the milk for free?[:P]
free?
wow, they did get a deal.
ed
Any tax credit can be a tricky business and obtaining the desired results depends largely on how carefully the requirements for the credit are defined. That being said, I also agree with the mudchicken and won’t get too excited until I see the final results as signed by the President.
Well, it wouldn’t have sounded as good if I had said "Why buy the cow when you can get the milk at a cross subsidized rate?"
The point is, if it walks, talks, and acts like a trollop, it probably is.
FM’s xenophobia is showing again and again and again. Perhaps he would like to undo history and pretend that the shipping container shouldn’t have been developed. As has been pointed out elsewhere, nothing has facilitated international trade quite like the container. Container traffic is a year-round high volume traffic so it’s going to get a better rate then two or three covered hoppers a week from a small grain elevator on a branch in Montana.
Critisism of a cross subsidy pricing policy that favors importers over domestic producers isnot xenophobia, it’s just a desire for economic justice. The critisism has nothing to do with the container shipping industry one way or the other.
Now, if I had called for overseas importers to be forced to cross subsidize domestic rail shippers, that would be xenophobia.
A healthy railroad industry benefits the country.
A unhealthy railroad industry drags the country down.
You are desirous of something that can’t exists, even under socialist or communist goverments.
These is none, never has been, and never can be “economic justice” unless every single aspect of every single business is controled by a government or regulatory agency.
Artificial leveling of the playing field amounts to a governmental monopoly, in that they alone must control the price, demand and or supply through regulations and laws.
So, in essence, what you’re saying is you want an outside agency to force private business to do as you see fit, not as the market demands?
You want a government monopoly, but only on your terms to fit your wants.
Let you in on a little secret, comrade, it was tried once before, and failed miserably.
Even your arch enemy, , has discovered that you can not micro manage all aspect of any business, not and profit from that business.
And that, good buddy, is what business is supposed to do, make a profit…not strive for social, moral or economic justice, but make money.
Your certainly not an economic genius, but a communist in yaks clothing.
But keep on searching for “economic justice” Dave, who knows, you may find it, and a way out of Oz, or ….
Mao’s Great Leap Forward cost 30,000,000+ lives and the Culural Revolution cost about 10,000,000 lives. At the end he did not achieve economic justice.
So why do you people want to supply supplication to such a failed experiment by propping up their economy with a US-citizen paid subsidy? Economic justice simply means having a level playing field for the participants in our free market economy. That means a free market government has to occassionally step in and break up monopolies. Especially the ones that play harlot to Mao’s Masses.
Strictly speaking a tax credit is not a subsidy. A subsidy is a cash disbursement from the government – that is paid from collected taxes. It’s a very important distinction. But I get the gist.
Let me help you think this through. Tax credits are thought by some, such as Milton Friedman, to be the superior approach to implementing government policy because the investor has to put up his own money prior to realizing any government benefit. That is with his own money at stake making a sound investment has priority over realizing a tax benefit. The taxpayer bears the bulk of the risk. The result is there’s less risk of fraud and hence less government supervision and overview is required. For example, there’s a $500 tax credit for buying a hybrid car in 2006. I certainly wouldn’t buy one because of the tax benefit. I’d buy one only if I thought owning a Prius would fit my life style. The tax credit only slightly lowers the hurdle to buying one.
Two reasons come to mind…
One, they are slowly changing thier ways…and two, they pay good.
We are railroads, Dave, not social, economic or moral dealers in justice of any kind, but a business.
We will haul dirt if you pay the price we want.
If the containers came from Italy, which some do, or Argentina, it really matters little to us, as long as the check dont bounce, bring it on.
Our job is to move stuff, lots of it, from here to there and back.
Creating justice, of the moral, social, or economic kind is best left to the UN, the Peace Corps, the Gates Foundations, Green Peace and the tree huggers, all of which are excellent organizations in their own right, and do serve moral and social needs…why don’t you go pester them for a while?
Of course, having the family farm in , and living in , both of which qualify as welfare states, explains why you think government is supposed to care for you cradle to grave, and why you expect “justice” in the form of government control.
Its the government’s job and responsibility to make your life better, not yours, right?
Ed