Here’s an example where you have a major railroad state seeking a grabfest of ca***o make up the state’s budget woes by hitting hard on railroads with a tax.
http://www.pantagraph.com/stories/042004/new_20040420033.shtml
We just might begin to see the reuse of Fuel Tenders in states which want to add taxes on diesel fuel.
Why does everyone want to pick on the railroads? [:(!]
And their visibility is often like that in the Union Pacific: Not Like A Good Neighbor thread.
Tomtrain,
I agree with you 100%. When public awareness of what railroads actually do has a visibility well below the radar and their relationship with John Q Public is stalled in the 19th Century, I won’t hold my breath for any meager empathy from taxpayers, let alone any understanding. I think that’s really unfortunate for all parties involved and when you leave it to the political process to exploit that vunerability, it will. All the public knows about railroads from the media are accidents on Amtrak , toxic chemical spills, derailments and crosssing delays as in today’s other post. The fault rests squarely on management shoulders and I think the writing is on the wall…maybe this time they will “get it.” What struck me about this article was an afterthought…what if other cash strapped states follow suit? Nearly every state is unable to meet their operating budgets and no one is going to give it a second thought if all the states meet their obligations on the backs of railroads. They are mega-corporations, they can afford it-right? Really a shame…what’s next, heaven forbid…tax truckers?
If the Railroads lose in this battle, it won’t necessarily be the end of the road for them, they’ll do what everyone else does: Pass the costs on.
If they’re smart the railroads will get their BIG CUSTOMERS to help with lobbying. The customer’s incentive is that his transportation costs are going to go up as a result of the fuel tax.
Whose idea was it for this tax? Sorry if anyone is offended, but Im willing to think that it was someone of a “Democrat” persuasion.
if you read the entire article, he’s attempting to lift the tax-break on all non-highway traffic, this not only includes railroads, but also any comercial shipping that occurs on the Illinois rivers, uses any Illinois ports on the missisippi and Lake michigan. And actually it’s about time the railsroads stopped getting 100% exemption on Deisel tax, although a complete lift seems a bit harsh, 1 or 1.5% would have sufficed.
To many Business’s get tax breaks, this in turn means John Q. Public has to pay more taxes to make up the lost revenue that Business’s buy exemptions from at fractions of what they’d pay normally. Think about it, a Big Business, like say UP, makes several million in profit a year, yet most pay less than $100K a year in taxes due to all their tax breaks. if they paid the same amount the Citizens do, they’d be paying more like $1-2 million in taxes and still have a hefty profit line.
Start looking at the Anual Reports of those 4 railroads complaining, they will pay about 50-60% of the $74 million (the rest will be made up by the various shortlines), if they pay the full 2.5% Deisel tax and see how that really affects them. that’s $37-44 Million, or $9.25-11 Million each. I highly doubt it’ll put a major dent in their profits.
In Looking at UP’s Anual report for 2003 (as i’m sure the Governor’s Office did on all the railrods), UP had a Net Income of $1.585 Billion in 2003, that’s profits folks, I hardly doubt $37-44 Million will dent that.
Jay
Ya, but if every state then copied Illinios great successfull tax grab maybe it would eat up all of $1.5 billion!
NTDN:
They’ve been taxing railroad diesel fuel for years, recinded the tax for motor vehicles and the railroaders are paying for highway improvements (not even at grade crossings)!
THAT is the big deal. If the dear govenor reads a bit further, the ROI that comes with the $1.585B is lousy, Wall Street and the guv’s 401-K won’t invest in it. (But then again, most politicians, especially Illinois Dem’s.are a little myoptic in that department)[V][V][V]
Because bad things happen to good companies(Like the Rock Island), and good things happen to bad companies (like Wal-Mart.)
Illinois is a pain of a state anyway, believe me I live here.
Look at those numbers. What needs to be scaring people is not that 4 big guys are going to pay 50-60 percent of the $74 million. It’s the statement in parentheses that just follows it–the 40-50% that’s left to make up (that’s $30-37 million) slams broadside into a bunch of shortlines, many of which are shoestring now and are going to have enough trouble making the 283K, much less the 315K weight limit, but they’re the ones that are keeping the rail-served industries either in business (commodities) or off the highways, with little or no ROI in most cases, and that would include locally financed rural rail districts that exist solely to provide service to industries (many attracted by the district’s existence) that otherwise would see the big boys blow right on by.
Talk about a potentially devastating kick in the gut…[tdn]
This could do for local economic development what 9-11 did for inflight meal service.
Corporate taxes are indirect taxes on the people. Every penny of the increased tax will be passed on to the railroads’ customers. Which will, in turn, pass the increased cost on to their customer. Which in turn. . . ultimately to us! It is the Democratic party’s version of trickle down. When will government learn to make real cuts in its programs instead of taking the so called easy way out.
The increased rates railroads charge because of the tax increase will cause a certain % of current customers to shift to the highway. This puts more strain on already overburdened roads. Then the government needs to raise taxes to improve the roads. And the cycle continues. . .
Best solution-keep the taxes where they currently are. Or better yet, lower the current tax rate on fuel for railroads to get a little more traffic off the highways thus reducing future highway expenditures. But this is Government.
“In Looking at UP’s Anual report for 2003 (as i’m sure the Governor’s Office did on all the railrods), UP had a Net Income of $1.585 Billion in 2003, that’s profits folks, I hardly doubt $37-44 Million will dent that.”
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Corporations don’t pay taxes. They can’t. Any tax on a corporation is simply a method of hiding taxes on people. The corporation is forced to serve as a tax collector for the governent and any hostility will be directed at the corporation when it either: 1) defers capital expenditures, 2) lays off people, 3) increases its prices, or 4) reduces its payments to investors. Its gotta get the money somewhere and those are the only palces it can get it.
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Major railroads, such as the UP, are now “revenue inadequate”. That means they don’t earn enough to attract needed investment. The $1.585 Billion in profit is a meaningless figure in and of itself. It’s only valid in relation to the amount of investment required to generate that “profit”. And when that ratio is calculated it is an inadequate amount.
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The new tax will obviously take money out of the UP that could be used for thing such as increasing the capacity on the Sunset Route.
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The $1.585 Billion $ is not really “profit” in an economic sense. It’s only “profit” as defined by the governement. It excludes payment for invested capital.
Illinois government is corrupt. I’ve lived here all my life except for the two years I was in the Army. This is no different than organized crime extracting an ever increasing payment for “protection” from merchants.
KS
Must Live in chicago, we all know how corrupt that is, the rest of the sate isn’t corrupt. but alas, Chicago is where we end up getting our down staters from.
Anyways, back to topic, that was $1.585 Billion Net Income, meaning it was after paying all the bills, taxes (yes corporations have taxes they have to pay), Dividends, contruction and aaquisitions. that is their personal take homepay (in terms the average person can understand) that is what is in their bank at the end of the year. Now they may take that and use it the next year to offset losses or to further construction, but the result is the same they have a very big Bankaccount that $40 million would be like me taking a dollar out of my checking account. it’s almost insignificant. to them.
Yes 40-50% of that $74 will be put onto Shortlines, but there are far more than 4 shortlines running, so the cost to a single one would be alot lower than what the big 4 would pay.
Democrates believe in a trickle up system, republican’s believe in a trickle down.
Jay
Railroads also have their own rights of way which they also pay taxes on and are not given any public funding to subsidize them unlike the trucks that mercilessly pound our highways which they use at our expense. Granted, there are some improvements paid for by the public when they offer a benefit such as the addition of a second track on the old WC line to Antioch, Illinois for commuter rail operations. However, just because I can afford to pay my taxes does not equate to agreeing with either what they are subsidizing or how well the money is managed which in Illinois…we know the answer to that question already. Remember the toll roads that were supposed to pay for themselves thirty + years ago? My only sticking point goes back to the lack of a balanced transportation policy on a federal level which is in reality, non-existent, therefore the states regulate by default in a crazy quilt patchwork that is more expedient than long term in planning. Who pays for the fuel to operate commuter trains? I am apolitical by nature however as Bob Dylan said you don’t need a weatherman to know which way the wind blows. The federal deficit is trickling down in a bad, not good way to the states and what’s trickling up is my money to a oligarchy that “manages” America and does not seem to believe in fiscal restraint and even the conservative right wing of the Republican party is understandably not real pleased with this situation….so taxing locomotive fuel to me is just another political end run around the real problem with politics which are the politicians.
No.
Dividends to investors are not considered an “expense” items. The $1.585 billion is not after dividends. Where on Earth did you learn accounting?
That’s one of the problems with false idea of “taxing corporations”, something that can not be done except as a government sham to hide the real tax rate on people. The net income earned by the UP corp will be “taxed” once when the UP reports it as income, and then taxed again when they pay for their capital. This double taxation of investment returns reduces the incentive to invest in American business and creates an advantage for non American firms in the world economy. The reality is that the investors have their return on investment taxed at over 50%. Damn difficult to attract investment capital when the government is going to take half of what is earned investing it.
It would be great if American corporations coul
[#offtopic]
Unfortunately we live in a capitalist society so money is everything!!! Every politician is a string puppet for some special interest with a large wallet. It’s pretty obvious in Illinois these days with certain contracts being granted on questionable projects, etc. I should just move to Denmark or some other Socialist holdout. In my opinion money is the root of all evil! [:(!] i don’t think education and healthcare are a prvililedge, they are a right to have and hold by every human being. Unfortunately in this country and most of the world money is everything, if you don’t have any you might as well go rot in a corner somewhere! It shouldn’t have to be that way. That’s why I don’t like voting. I do it only because I go to choose the lesser of two evils. I wihere was some big red button that we could puo restart our political system and purge it of $$$$$ influence! [oX)]
Boy, i think that’s the first time I’ve been called ignorate, envious and a democrate all for being right.
Funny how Us Republican’s, when we back what is right are called liberals and ignorant.
Jay
I’m glad I wore my flame retardant suit this morning and I have my label gun poised and ready. Aside from the questionable debate of who is more ignorant, Republicans or Democrats…there’s alot of divisive and fierce competition these days on both sides
of the aisle to claim exclusive territorial rights on the rigidity of their views and only in politics is running a deficit operation a prerogative, while the lack of statemanship makes the entire exercise increasingly pointless. Was’nt it Woody Guthie who said some people rob you with a fountain pen? I don’t think anyone has been retained at a corporation as an accountant because they are a registered Republican.However I do agree with the exemption of corporate dividends As far as taxation at a 50% rate, I don’t know what investments are being referred to, but from my own experience alot depends on what you do with the capital return on investment as well as the means under which it was originally invested. As far as envy is concerned in the political process, it depends on whose team is winning on a day to day basis on terms of self interest rather than what’s best for this country. Corporation is a conceptual term for a contingent reality based on language which in turn is based on reliable cliche’s so our mouths can form similar sounds we can identify as a language to communicate with… It is neither good or evil just like Republicans and Democrats. As Pogo said, “We have met the enemy and he is us.”
You’re not right. Live with it.
KS
Walley, even though I’m right and others refuse to admit when they’ve been bested and they’re wrong, I’m not gouing to let your thread deteriate to a flamefest. so this is my last post for this thread. and as stated before, yes I’m a republican and Yes I agree that The Gonvernor is doing the right thing by lifting the tax break, although I do agree it is a bit harsh, 1% instead of 2.5% would have been acceptable. but then again, UP had profits exceeding $1.5 Billion after dividends, so they can afford it. Didn’t look at the other 3, but I’m pretty sure they could to.
Jay