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High Speed Trains Killing Airplanes in Europe

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JT22CWThe U.S. has one of the lowest tax burdens of any OECD countries.  If one uses the median per capita tax burden or median household tax burden, the burdens shift somewhat; but the trends stay nearly the same.  Cross border comparisons are difficult because of the significant variances in the tax codes.  If one country places a heavy reliance on regressive taxes, i.e. sales, property, excise, etc., the median tax burden tends to shift down the income distribution ladder, whereas the burden in a country that relies more heavily on progressive taxes sees a different pattern.  In a country as large and diverse as the U.S., with multiple taxing jurisdictions, getting an in-country comparison is challenging.  In the U.S. the state/federal tax burden, before the application of pass through taxes, ranges from 38.3 per cent of median income in Connecticut to 27.8 per cent in Oklahoma.      Cultural differences between the U.S. and the other OECD countries, including the English speaking countries, are greater than most Americans realize.  Having lived in Australia, Canada, and Japan, as well as seven states of the U.S. and the District of Columbia, I have some insight into these differences.  They have a significant impact on each society's values, which amongst other things determines how much they spend on public transport.Since its inception Amtrak has received approximately $30 billion from the U.S. Treasury to cover its operating loses and capital expenditures.  Had it not been supported by the federal government, with the possible exception of the NEC, it would not have survived.  If a commercial enterprise cannot generate sufficient revenues to cover its costs, it is being propped up or subsidized, which are synonymous. Had the average annual federal subsidy received by Amtrak since its inception been invested at the ten year Treasury note rate, it would have grown to $85.2 billion by the end of FY 2007.  Had it been invested in an S&P 500 Index Fund, it would have ballooned to $248.1 billion.  Moreover, if the future Amtrak subsidies, assuming the same average annual amount received from 1971 to 2007, were invested under the same parameters, they would reach $817.6 billion to $1.3 trillion by 2050.  If the long distance trains were dropped today, using the same investment guidelines, the savings would grow to $59 billion by 2050.  As seen by these examples, relatively small subsidies ($1 billion a year) can grow into a lot of money over time.   Railroads are a mature industry.  They consolidated to compete against new technologies and alternative transport providers.  Had they not done so they would have gone bankrupt.    In the 1960s the CEO's of America's passenger railroads told the Congress that the continued operation of passenger trains was not sustainable.  The federal government responded with the National Railroad Passenger Corporation.  It is a political solution.  The government did not rush into the passenger railroad business.  It formed Amtrak because of a perception, perhaps rightly so, that Americans, although they did not ride them very often, wanted to keep their passenger trains.    Transport modes have a natural or inherent advantage in certain markets.  Airplanes, for example, have an inherent advantage for long distance travel or shipping because of their speed.  Surface bound vehicles cannot compete with them.  The airlines probably did do better under regulation.  The question is whether you believe the airlines should be guaranteed a return, as was partially the case under regulation, or whether the market should work for the people, which is what deregulation has brought about, frequently to the chagrin of airline executives who could not figure out how to compete.  Connex, which is owned by Veolia Transport, is a contract operator.  It is not expected to put anything back into the infrastructure.  But because it operates transit systems better, faster, and cheaper than government operators, the state has more resources to plow back into equipment and a facility, which is what happened in Melbourne.
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