PNWRMNM Don, I will stick to huge. Freight gross earnings are in the range of $1.00 to $1.50 per car mile, assuming 100% empty return. that is $ 2-3 per loaded car mile. At 100 cars per train that is $100-150 gross revenue per train mile. If delete equipment and crew costs we are down to $80-120 or so per train mile, say $100. If Mr. Payne's $4.50 per train mile is accurate, the passenger train pays 4.5% what a freight train does and imposes more congestion costs than the average freight train due to it legally mandated prefferential treatment. That is a huge discount, that is a hidden tax on the freight carriers, and a hidden subsidy to ATK. It would be nice to see the passenger train advocates admit that fact. I have yet to see anyone acknowledge that fact on this website. As to the other poster who listed capacity improvement projects that various government agencies are funding on ATK's behalf, the freight carriers have no need for these projects BUT FOR the presence of ATK. The freight carriers are simply being made whole for the new capacity ATK will consume. The fact that one can list a few projects simply proves that these are the exception to the rule of imposing a free ride for ATK on the freight carriers. I still say shut it down. Mac
Don,
I will stick to huge. Freight gross earnings are in the range of $1.00 to $1.50 per car mile, assuming 100% empty return. that is $ 2-3 per loaded car mile. At 100 cars per train that is $100-150 gross revenue per train mile. If delete equipment and crew costs we are down to $80-120 or so per train mile, say $100.
If Mr. Payne's $4.50 per train mile is accurate, the passenger train pays 4.5% what a freight train does and imposes more congestion costs than the average freight train due to it legally mandated prefferential treatment. That is a huge discount, that is a hidden tax on the freight carriers, and a hidden subsidy to ATK. It would be nice to see the passenger train advocates admit that fact. I have yet to see anyone acknowledge that fact on this website.
As to the other poster who listed capacity improvement projects that various government agencies are funding on ATK's behalf, the freight carriers have no need for these projects BUT FOR the presence of ATK. The freight carriers are simply being made whole for the new capacity ATK will consume. The fact that one can list a few projects simply proves that these are the exception to the rule of imposing a free ride for ATK on the freight carriers.
I still say shut it down.
Mac
I don't have access to the numbers, but your argument makes sense. In addition to the hidden subsidy re: freight carriers hoisting Amtrak's trains without adequate compensation, Amtrak receives numerous other hidden subsidies. It pays no fuel taxes, property taxes, inventory taxes, sales taxes, etc. Furthermore, it pays no income taxes because it has never had any net income.
Amtrak has made no improvements for the benefit of anyone else. The improvements were made by the taxpayers. Amtrak does not have any money for capital improvements. It has lost more than $28 billion since its inception. The opportunity cost probably is north of $50 billion.
I would keep the high density corridors, but I would bid them out to the lowest effective cost bidder. The operator would be required to pay a fair rent to a hoist railroad to lift its passenger operations.
I think I understand you correctly in that you conclude:
1. Amtrak does in fact pay its own way.
2. While Amtrak is not a large source of revenue for any freight railroad it does generate a steady stream of income which is valuable to them and without Amtrak the host railroads would be worse off.
Please correct me if I'm wrong.
In FY11 Amtrak paid the host railroads (CSX, BNSF, UP, etc.) $123.4 million to lift its trains. How much did it pay the Norfolk Southern (NSC) to host its trains? How much did it cost the NSC to host Amtrak's trains? These are the key questions. The answers are not to be found in a theoretical construct. They can be found in Amtrak's and NSC's detailed accounting records. No one posting to these forums is likely to get the data.
In FY11 N&S had accrued federal and state income taxes of $1,002 million. It had deferred income taxes of $527 million. It paid net of refunds and prior period adjustments $289 million in income taxes. As of the end of the accounting year, NSC had $7.5 billion in deferred income taxes. Only those who have access to company's accounting records would be able to unravel the deferred tax liabilities and know the ultimate impact on the corporation's income statement.
As of the end of FY11 N&S had $7.8 billion of deferred property taxes plus a pending property tax credit of $9 million. It appears that NSC has not paid much in the way of property taxes for a long period of time, probably due to the credits it gets from its ownership stake in Conrail Inc. It has a 58% economic interest and a 50% voting interest in the jointly owned entity with CSX.
The information regarding N&S's tax obligations can be found in the 10k, which the company files annually with the SEC. Even here, unless one is a tax accountant or tax lawyer, with access to the company's tax records, getting a true picture of the company's tax liabilities is impossible.
There is usually a significant difference between what a large corporation accrues for income taxes, as well as other taxes, and what is paid. The variances are usually a function of different interpretations of the relevant tax laws by the corporation and the IRS. It takes the IRS two to five years to complete the audit of a large corporation; therefore, it is not unusual for it to have just signed off on an audit that was completed two to five years ago.
Highways don't pay taxes. True! In Texas most of the land that they occupy is relatively worthless. What is missing from the analysis is recognition that the highways in Texas, whilst they removed some land from the tax rolls, spawned thousands of businesses that pay millions in taxes.
As the CBO' studies have shown, because of different state, county, and local methodologies for paying for highways, airways, and waterways, the users don't see the true cost in many instances. Nevertheless, as pointed out in a previous post, the users ultimately pay it, although a disproportionate share is borne by upper income users.
What is also missing from the analysis is any mention of the fact that Amtrak pays no taxes. And it pays little if any rent on most of the stations that it calls on. What is the value of these subsidies? One would have to go through every taxing jurisdiction served by Amtrak to determine the value. It would be a daunting task.
In addition, assuming for a moment that passenger rail is not getting a fair shake, where will the money come from to gin up the parity sought? This nation is $16+ trillion in debt, and it is facing unfunded liabilities of more than $46 trillion. And that is the intermediate estimate. The worse case scenario places the unfunded liabilities north of $70 trillion.
The idea that the nation's motorists are going to give up real and perceived monetary benefits to expand a passenger train network is a political non-starter. I would like to see improved passenger rail service in the I-35 corridor. So what is happening? I-35 is being rebuilt from the Mexican to Oklahoma borders. This is what all but a few rail buffs in Texas want. Better passenger rail service It is not going to happen in Texas. Not in my lifetime at least!
John WR I think I understand you correctly in that you conclude: 1. Amtrak does in fact pay its own way. 2. While Amtrak is not a large source of revenue for any freight railroad it does generate a steady stream of income which is valuable to them and without Amtrak the host railroads would be worse off. Please correct me if I'm wrong.
You are wrong, or perhaps you are correct in your conclusions, but who you are agreeing with is wrong, and here is why.
If it were purely a matter of axles times tons times speed (or maybe the speed or cube of speed) formula for how to divide up the cost of running a rail line, Amtrak is probably paying a "fair" price, and for all I know, the formula for deciding how much Amtrak should pay is based on something along those lines.
Also, if the rail lines had a certain capacity that the railroads needed to fill, provided Amtrak was covering its "marginal costs" by paying for the impact of its axle count on maintenance expense, yes, there is an argument regarding "market segmentation" and "a steady income stream which is valuable to them."
The way I see it is that the post Staggers Act railroads divested themselves of a large amount of capacity in excess of traffic demand, you know, everything being single-tracked, so they are not out there looking for traffic covering incremental costs simply to run more trains. Given that the railroads downsized themselves, perhaps severely, to not have to support the capital expense of double track or the number of siding we think they need to properly support Amtrak, I see them as rather capacity constrained. We believe the NARP talking point of "one track being the equivalent of 20 traffic lanes." Well maybe a double-tracked cab-signalled rapid transit line with uniform train speeds, high braking performance, and close headways offers such a thing, but most of the lines hosting Amtrak long-distance trains have nowhere near that capacity for more passenger trains.
Do you suppose that even a single daily Amtrak train can pose some serious operational constraints -- our expectation is that it be given priority handling, that freights would take sidings to let it travel down the line unimpeded -- and to think of the delays imposed on the freight traffic, not to mention crews being disqualified for exceeding their Federal hours-on-duty limits.
So then it comes down to "well, the freight railroads need extra sidings because of their burgeoning intermodal traffic, so it should not be a problem accomodating a few more Amtrak trains." Something tells me, however, that "we" expect even a higher degree of priority handling for Amtrak than what intermodals even gets. Suppose a "hot" intermodal runs at a track speed of 60 MPH -- would we be satisfied with that for an Amtrak speed limit so Amtrak trains better fit into the "flow of traffic"?
But suppose "Amtrak does in fact pay its own way" -- Don Oltmann suggested as much in contradiction of other railroad people commenting here who have stressed the level of disruption to the normal traffic flow resulting from a passenger train. Don Oltmann also suggested that Amtrak would benefit from having a Norfolk Southern liaison person, in my words, a "Thorougbred (the NS corporate logo) whisperer", someone at Amtrak who could figure out what kind of "horse trade" would make NS happy to host an Atlanta-Richmond day train or whatever would make passenger train users happy.
That breath of a suggestion prompted a stream of reactive comments around here, responses to the effect that NS would be "taking Amtrak for a ride." So to the extent that there is an "entitlement mentality" in the passenger train advocacy community, that the freight railroads "owe" hosting Amtrak trains along with giving them priority handling, dunno, for "common carrier" reasons, for "public easement" reasons, for the land grants of the 19th century (to some but far from all railroads), such suggests to me that the low fees paid by Amtrak to use the tracks represent a "taking."
If Amtrak solves some transportation problem at lower added cost than an alternative (more highways in a congested transportation corridor), whatever Amtrak costs is worth the money. But if the argument is "fairness", that it is not "fair" that highway users get the road "for free" (allegedly -- we can "beat the dead horse" of the fuel tax as a user fee), let's give Amtrak enough subsidy so passenger trains "get the rails for free", and let Amtrak compete with Megabus on an above-the-contact-patch basis.
But then you get into arguments about how miserable Megabus is, how passengers walk in a stoop to get to their seats in the upper deck, how their buses crash all the time and drop passengers off on urban street corners where they are easy prey to criminal gangs, along with commentary that passenger using Megabus goes against Social Justice. Along with the suggestion that the United Nations needs to investigate the feeding of bus passengers with stale truck stop hot dogs as a possible war crime.
If Amtrak passenger trains are that much superior to the Megabus experience, how about the gummint pay for the tracks, yes, let the state and local governments pay for the train stations, but let Amtrak passengers pay for the costs "above the wheel rail contact patch", and I don't mean just direct operating costs, I mean the whole train -- what I call the "steel-wheeled bus" concept. If Amtrak provides a proportionately more desirable travel experience, should not, would not, passenger pay higher fares over Megabus? Or is there some Social Justice reason to subsidize Amtrak at 20 cents per passenger mile?
If GM "killed the electric car", what am I doing standing next to an EV-1, a half a block from the WSOR tracks?
You are wrong. A "customer" that pays at best the marginal cost of track maintenance is not a customer any railroad wants since the marginal cost of track maintenance is a tiny fraction of total costs.
ATK is a leach on the freight carriers and will be until it pays a per train mile rate comparable with freight train earnings less crew and equipment costs.
PNWRMNM A "customer" that pays at best the marginal cost of track maintenance is not a customer any railroad wants since the marginal cost of track maintenance is a tiny fraction of total costs. . . . until it pays a per train mile rate comparable with freight train earnings less crew and equipment costs. Mac
A "customer" that pays at best the marginal cost of track maintenance is not a customer any railroad wants since the marginal cost of track maintenance is a tiny fraction of total costs.
. . . until it pays a per train mile rate comparable with freight train earnings less crew and equipment costs.
The passenger train advocacy community (cough, NARP, cough) had cut its teeth on questions of marginal costs vs fully allocated costs in formulas to determine whether passenger trains are really run at a loss, or at the high levels of loss claimed when appealing to regulatory agencies.
There is a line of reasoning I have heard in passenger train advocacy circles, something to the effect that the private railroad companies (cough, Warren Buffet, cough) lack the ability to raise enough private capital to build all of the sidings or double track to accomodate the intermodal freight that will come their way, that the railroads will have to accept government grants, and in accepting such money, Amtrak will have more say in the railroads operating more passenger trains. He who pays the piper calls the tune and all that.
I get a sense that the management of the railroads have enough a sense of public service that they are willing to accomodate passenger trains, even new passenger trains, without payment according to some fully allocated cost formula. Maybe railroad operations people "have had it up to here" about how granting Amtrak trains passage over their lines and divisions adds stress to their lives what with freight train crews reaching their legal hours parked in sidings and everything, but the folks in upper management still regard friendly public relations as a Good Thing (tm), although it seems there are many passenger train enthusiasts and advocates who see everything to do with the host railroad as an adversarial relationship.
Beyond that question, the issue of "fairness" and "level playing field" comes down to "passenger trains have to pay (a share) for the tracks whereas Megabus and motorists get the road for free." Amtrak certainly has to pay for the tracks, and maybe they don't "pay enough", but the level of the Amtrak subsidy far exceeds to amount to pay for the tracks. If the Amtrak subsidy were enough to pay for the tracks, if Megabus gets "the highway for free" (yeah, yeah, fuel tax and the Highway Trust Fund, but let's stipulate the reasoning about major highways being highly cross-subsidized), then we have that "level playing field."
Is that what people here want, that we reduce the Amtrak subsidy to the "level playing field" level? Isn't that the kind of thing that gets proposed by Congress every few years or so that gets us so angry about anti-train politicians?
Also, if Amtrak is subsidized at level well above what they are charged for the tracks, what does that say about passenger trains as a cost-effective mode of transportation? One school of thought is that passenger trains have high levels of unquantifiable social benefit not taken into account by "the bean counters."
Another school of thought is that passenger trains are supposed to be a low cost means of transportation. Individual passenger trains have almost limitless passenger capacity by adding more cars or using double-deck cars whereas buses are subject to highway size and weight limits and the Airbus A380 is at the technological upper bound of the size of an airliner? A train is supported by the tracks and you don't have to perform meticulous NASA-level maintenance on it so it doesn't fall out of the sky? A train can be built out of lower cost materials such as steel instead of carefully machined out of aviation grade aluminum along with having expensive-to-maintain and redundant high-pressure hydraulics to operate the flaps and raise and lower the wheels?
Forget about whether the Amtrak subsidy has political support or not, what is that makes passenger trains so expensive? And they seem equally expensive in Europe where they have many more passenger trains?
So what makes passenger trains so expensive, even in an above-the-contact-patch make-all-the-stations-Amshacks way.
Lots of varied sentiments here. Some favor a non-subsidized or privatized Amtrak. Some of those believe Amtrak is getting a free ride from the freight lines. Some believe passenger rail in general is too expensive (Paul M.). Others (sam1, don oltmann and myself) believe LD trains make little sense and favora rationalized, densely-populated corridor development. Still others would like a widespread system which would look something like the 1950's. Time will tell.
C&NW, CA&E, MILW, CGW and IC fan
Paul,
Thank you for your thoughtful analysis.
As I understand your argument you say that for Amtrak to pay those extra costs the Host incurs because of Amtrak trains is not sufficient. To the extent that Amtrak occupies the Host's track the Host cannot run more profitable freight traffic. The Host is denied the profit that it might earn on its own property during the time it must accommodate Amtrak. To require the Host to forego legitimate profit in order to provide for Amtrak passengers is just plain unfair.
The reason we do this is because we Amtrak riders have a sense of entitlement; that we are entitled to our trains regardless of the consequences for the Host. From our own perspective, if our desire to ride trains reduces a Host railroad's profit that is just tough. The fact that we passengers have organized ourselves well enough to force Host railroads to give us what we want testifies to our political influence but not to our sense of justice or fair treatment.
Finally, while it may seen that railroads are powerful and arrogant corporations that image is false. Reading railroad history it is clear that when groups of citizens have organized to fight railroads it is the citizens who have won out over even the wealthiest and most powerful companies. Our victories almost destroyed US railroads. We ought to be grateful to our opponents who saved the system that today benefits all of us.
I went to the Association of American Railroads and found this background paper: https://www.aar.org/keyissues/Documents/Background-Papers/Freight-and-Passenger-Rail.pdf
Freight and Passenger Rail: Finding the Right Balance begins by saying we need more railroad transportation, both freight and passenger. It concludes conflicts should be resolved by an appropriate allocation of costs. It accepts the current allocation with the provision that freight railroads' ability to transport freight should not be compromised. Finally, it says that if high speed rail is to come that should not be paid for by the railroads. I think the position is sound. What it does need is both government leaders and freight railroad leaders who are committed to both freight and passenger rail service.
John
Mac,
My response to Paul in the previous post is also for you. All I would add is that the Association of American Railroads in fact does want Amtrak as a customer.
Those passenger advocates who sees host railroads as their enemy are in fact undermining passenger service. If freight railroads are to serve Amtrak well they must themselves be strong. If they are weak, if their roads deteriorate, Amtrak trains will be defeated by slow orders. To paraphrase Jim Hill either freight railroads and Amtrak will succeed together or they will fail together.
Paul Milenkovic Forget about whether the Amtrak subsidy has political support or not, what is that makes passenger trains so expensive? And they seem equally expensive in Europe where they have many more passenger trains? So what makes passenger trains so expensive, even in an above-the-contact-patch make-all-the-stations-Amshacks way.
I think readers of David P. Morgan have known the answer to this for 50 years: expensive equipment and a lot of crew, both of which "turn" too slowly. Buses are cheap with much lower overhead, some of it taxpayer-supported. Airlines are no great moneymakers, but do manage to turn their hugely expensive equipment and smaller crews fast enough to earn a little money (sometimes).
No mystery. Also no debate about passenger rail gaining competitiveness in shorter markets. The question is, can the U.S. "afford" long-distance passenger rail?
Some of us say no. I say, of course we can, if we can afford anything. If every dollar has to go to either the military or to this or that entitlement, we have leapfrogged Europe -- which at least still runs passenger trains -- and signed up for the Third World.
Schlimm,
I don't recall sharing this perspective with you. Please excuse me if I repeat myself.
Of all Amtrak trains it is true that its long distance trains are the most difficult to justify and require the greatest amount of government support. However, Amtrak, if it is to exist at all, must be a national rail system. If it isn't then there will not be a sufficient consensus to support regional intercity rail systems.
Perhaps we should not have a national rail system and let those states who want regional rail systems get together and provide them for themselves. Those states who do not want it would not have passenger rail service. But if we do abolish long distance trains we loose any national rail system and loose a lot of our intercity service too.
John WR Mac, My response to Paul in the previous post is also for you. All I would add is that the Association of American Railroads in fact does want Amtrak as a customer. John
John,
What you see from the AAR is a political statement, not an economic one. The freight carriers have made a political decision to bear the costs of ATK.
That does not mean that the system is fair or equitable. The underpayment of the freight carriers for the use of their property is part of the social cost of ATK and goes to the original point of this thread which is how the US Government has skewed the market for passenger transportation.
PNWRMNMWhat you see from the AAR is a political statement, not an economic one. The freight carriers have made a political decision to bear the costs of ATK.
The freight railroads are not required to make any statement at all. As a matter of public policy they could choose to simply not comment. But, as you point out, they did choose to make a political statement. Is there some particular reason why AAR should not determine its own policy and publish that policy on this issue?
dakotafred I think readers of David P. Morgan have known the answer to this for 50 years: expensive equipment and a lot of crew, both of which "turn" too slowly. Buses are cheap with much lower overhead, some of it taxpayer-supported. Airlines are no great moneymakers, but do manage to turn their hugely expensive equipment and smaller crews fast enough to earn a little money (sometimes).
The "lot of crew" may be institutional inertia. You would think that trains, practically limitless in capacity, would have a crew-cost advantage over the bus, limited by highway size and weight restrictions, but I guess the bus driver is a "one man band" of driver, conductor, baggage handler, meal facilitator (yum, truck-stop hot dogs!), and passenger service agent whereas Amtrak has multi-person crews. Yes, and I know that everyone on an Amtrak crew serves a purpose and does their job efficiently, and maybe that speaks to trains being inherently at a cost disadvantage?
The thing about expensive equipment, a recent Trains editor (I think it was Mark Hemphill) commenting around here gave $50,000 as the cost of a Beth-Gon freight car whereas a new passenger car costs, what, $5,000,000 (OK, the block order of bi-levels seems to be coming in at 3.3, but isn't Amtrak paying 5 for its high-speed baggage cars?)
You are talking a 100:1 ratio between something which is able to go safely down the rails, maybe at up to 60 MPH, and something that is deemed comfortable enought to carry passengers and travel faster. Yeah, yeah, FRA standards, can't buy European or Asian passenger trains "off the shelf", but there must be more to it than that.
Do you suppose because of the inherent instability in a solid-axle with cone-tapered wheels, that a decent ride quality for a passenger car requires a complicated railway truck? Do you suppose that a passenger train operates in a high shock and vibration environment, owing to both the steel-on-steel contact of its main support, the inherent instability of the railway wheel set, coupling impacts along with buff and draft forces of a railway car operating in a train? That a railway car along with all of the appliances -- doors, HVAC, seats, public addresss systems -- have to be especially heavy-duty, both for the comfort and safety of the passengers and to hold up to the stress? That a rail passenger car requires a high level of maintenance owing to the shock and vibration to which the basic structure along with its appliances are subject to?
With respect to the shock and vibration environment, didn't the Cascades Talgo experience cracks in suspension frames (the "single axle truck")? Didn't a CN TurboTrain suffer fracture of the pendulum-tilt suspension links in an entire consist as a result of a hard coupling to a switch engine?
It has been mentioned something along the lines, "Oh yeah, those smarty-pants automotive engineers or aerospace types come up with some kind of 'Train of the Future', but it won't hold up in the 'real world' of railroad operations." So what is that 'real world' of railroad operations? The "toughness" required of railroad operations is spoken of as some kind of Badge of Courage, but maybe there are fundamental operational reasons why passenger trains are expensive?
Well, I would hope so. Amtrak is a member of the AAR!
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
The highway faces its challenges, too.
http://www.postcrescent.com/viewart/20121222/FON0101/312220307/Wis-commission-calls-increasing-gas-tax
Amtrak is a member of AAR. Also, some members are commuter railroads.
Yes, highways do face challenges. In many places they are crumbling away and motor fuel taxes are not remotely enough to pay for reconditioning them. And, at least in my part of the country (the northeast) a lot of bridges are deteriorated.
Where we will find the money for repairs and replacement is anybody's guess.
John WR Yes, highways do face challenges. In many places they are crumbling away and motor fuel taxes are not remotely enough to pay for reconditioning them. And, at least in my part of the country (the northeast) a lot of bridges are deteriorated. Where we will find the money for repairs and replacement is anybody's guess.
A logical response is to raise the level of motor fuel taxes, especially since both cars and trucks have become more fuel efficient and one can argue that the levy per mile to pay for the highway infrastructure has actually gone down in constant-dollar terms.
Oh, but good luck raising the gas tax! I agree with that -- when the gas tax was committed to highway improvements, I think there was a lot more political support than when it became a source of money of deficit reduction a couple Presidents ago, when gas tax money is diverted into supporting mass transit, and in such instances where gas tax money goes to urban highways, it has to go to "transity" features such as High Occupancy Vehicle Lanes (HOVL).
To the extent that it is politically impossible to raise gas taxes because people are paying so much in taxes for Defense, health care for seniors, and interest on the accumulated debt, maybe we are going in the direction of "The Third World", but it certainly isn't because we lack passenger trains.
To the extent that bridges and highways are crumbling, it is argued that OTR trucks are doing the damage. If that is the case, the best policy response would be to pull Amtrak off the railroad lines to allow the host railroads to carry more freight traffic and see if more freight can go by rail than by highway, no?
And to the extent that the bridges and highways are crumbling, where do we spend the money that we don't have, do we fix the highways and bridges or do we let the highways and bridges crumble away and concentrate resources on trains? One would think that trains are a more cost effective way of moving people than highways, but the pencil-sharpening exercise that started this thread still has trains as more expensive than highways by at least a factor of two.
I have heard this argument before. I supported the 800 million dollars for the Madison, WI to Milwaukee to Chicago passenger train service and ran public exhibits at the Madison Model Railroad Show drumming up popular support, but 800 million dollars is still a lot of money. I saw the train as promoting economic development in Madison by encouraging commerce along that corridor, making the trip to Chicago convenient to people who would otherwise not make that trip on a regular basis.
So one of our "advocacy people" starts talking about "yeah, people are complaining about spending 800 million on the train, but they are going to have to spend at least that amount resurfacing I-90 from Janesville to the Illinois border!" When people start reasoning that way, the skepticism that is a professional component of what I do for a living starts to kick in. "Your arguments are not properly supported -- you get a "C" on your report."
A billion dollars to resurface the Interstate, nearly a billion dollars to get train service, it is only "fair" that if the highway gets that amount of money that the train does too. What if that highway carries multiples of the passenger miles that the train ever will? What if that Interstate is also a major freight carrier, and that the freight contribution to the economy exceeds what the passenger autos or the passengers on the rail line will ever contribute?
So given that the bridges and highways are crumbling and we don't have the money to fix them, where are we going to get the (larger) amount of money to substitute the equivalent level of passenger train service?
I agree with everything you say except I don't want to see Amtrak go under.
But if you will here one addition to your own insights: Freight railroads should be exempt from property taxes on their rail lines. This would simply even the playing field between them and trucking companies. After all, trucking companies get to use tax exempt roads and, while they do pay taxes, they do not pay any property tax on the roads they use. This would free up a lot of money for the freight railroads and I'm sure they could find ways to use it that would be good for them and good for the society.
So if you don't like the way I feel about Amtrak maybe the way I feel about freight railroads will make it a little less objectionable.
Cars and trucks are more fuel efficient, and Americans are driving less. I suspect that the recession has had something to do with it. More fuel efficient vehicles and reduced driving have resulted in a road funding problem, since the fuel tax is a major source of revenue for state and federal highways.
A quick partial fix in Texas would be to stop diverting 25 per cent of the fuel tax to education. At the federal level a halt to diverting approximately 22 per cent of the HTF to mass transit and other activities would help provide more funds for roads. Both probably are non-starters
Financing public education in the Lone Star State is challenging. Taking way the diverted highway funds would produce a howl of protests. Moreover, raising the fuel tax in Texas is another non-starter. Texans want better roads; they just don't want to pay for them. So what is the answer?
Toll roads! That's what we are doing in Texas. At first I did not like the idea, but the more I have thought about it, the more I have cottoned up to it. Tolls are paid directly by the users. They know exactly what they are paying to use the roadway. It gives them a better idea of what it costs to drive. And it is going to become more clear as time goes on, because it is how we are going to fund urban roads in Texas. Also, it is fairer.
Many of the folks way out there, as in Midland and Odessa, claim that it is unfair to increase the state fuel taxes to pay for the complex, costly roads required in urban areas like Dallas, Houston, and San Antonio. And they are right. Toll roads in urban areas are paid for by the motorists who use them. And not by folks out there!
I don't want to see passenger rail go under. I want it to be part of the solution, which is in relatively short, high density corridors. Long distance trains make no economic sense.
Whether passenger trains are operated by Amtrak or others is immaterial. I would be just as happy to see the corridors bid out to the lowest effective cost bidder. The outcomes probably would be better.
Trucks pay fuel taxes, heaps of them, that help pay for the roads they use. True, the really big trucks don't always pay the full cost of the wear and tear they impose on the roadways, but they pay a lot of fuel taxes.
The railroads do not pay any fuel taxes. Do the property taxes that they pay proportionally offset the fuel taxes paid by truckers? Under current law the host railroads may not pass any taxes through to Amtrak for hosting its trains. So the amount of property taxes paid by the freight railroads is immaterial with respect to the passenger trains hosted by them.
The most important questions are where does passenger rail make sense, what should it look like, and how will it be paid for. What truckers and airlines do is immaterial to answering the questions. Equally important, what they do in Japan or Europe is also immaterial to what we should do in the United States with respect to passenger rail.
Sam, you know you are distorting the argument. Long distance truckers pay between one-third and one-half the cost of the wear and tear the cause on highways. I've seen these figures in the British publication Transportation, published by a London University, as well as elsewhere, with research to back up the assertation. But I agree with your assertation that what is important is what passenger trains make sense. But sometimes even subsidized trains make sense, Even certain long distance ones.
Railroads don't pay fuel taxes because they maintain their own rights of way. And they pay real estate taxies on the RofW, which truckers do not.
daveklepper Sam, you know you are distorting the argument. Long distance truckers pay between one-third and one-half the cost of the wear and tear the cause on highways. I've seen these figures in the British publication Transportation, published by a London University, as well as elsewhere, with research to back up the assertation. But I agree with your assertation that what is important is what passenger trains make sense. But sometimes even subsidized trains make sense, Even certain long distance ones. Railroads don't pay fuel taxes because they maintain their own rights of way. And they pay real estate taxies on the RofW, which truckers do not.
As was pointed out in the Federal Highway Cost Allocation Study (1982), which was replicated in 2000 using 1997 data, different classes of trucks produce different levels of wear and tear on the nation's highways. To assume, for example, that a Frito-Lay 18 wheeler, which is carrying potato chips, has the same impact on a highway as a heavy fuel truck is incorrect.
As I noted in my post, most students of transportation know that heavy trucks cause more wear and tear costs to roadways than the highway authorities recover in fuel taxes, licensing fees, etc. to maintain them. But the spread, depending on class of vehicle, is not has high as you claim. Moreover, the methodologies for collecting the data are suspect, at least when it comes to making an absolute claim.
Railroads don't pay fuel taxes because they are classified as off-road users. Just like farmers! Again, do the fuel taxes paid by truckers, along with all the other taxes that they pay, equal the property taxes paid by the nation's freight railroads?
Truckers and railroads pay property taxes, inventory taxes, excise taxes, etc. on their terminals, etc. So the apples to apples comparison would be the fuel taxes, licensing fees, etc. paid by truckers, which go to the federal and state governments for road construction and maintenance, compared to the net property taxes and maintenance costs for the railroad rights-of-way. The railroads can deduct the property taxes and maintenance expenses from their income tax returns. Moreover, they can and do negotiate the amount of property taxes that they are required to pay whereas the truckers pay the fuel taxes and cannot negotiate them. If I get some time, I am going to look into it and see how it comes out. It may be that the net costs are very close.
Subsidies to, airlines, bus companies, motorists, etc. have nothing to do with the question of where do passenger trains make sense. They should not be subsidized anymore than airlines, bus operators, and motorists are subsidized. None of them should be subsidized.
There is nothing holy about passenger trains. Long distance trains make no sense whatsoever. Especially for a country that is $16 trillion in debt and facing more than $46 trillion in unfunded liabilities!
Generally speaking, for profit companies pay taxes on their real property. This includes the tracks owned by for profit railroad companies. Their trains roll over these tracks. On the other hand, motor trucks that carry freight roll over public roads and they pay no property tax whatsoever for using public roads. This difference imposes a considerable burden on railroads that truck companies do not have.
Sam1The most important questions are where does passenger rail make sense, what should it look like, and how will it be paid for. What truckers and airlines do is immaterial to answering the questions. Equally important, what they do in Japan or Europe is also immaterial to what we should do in the United States with respect to passenger rail.
The first statement as to the questions relevant makes good sense. The second and third statement are stated as though they were facts when they are your opinions and clearly quite subject to debate.
Sam1What truckers ... do is immaterial to answering the questions. Equally important,
Well, yes. Trucking companies do not choose to exempt themselves from property taxes. It is government that gives them that exemption and trucking companies simply take advantage of it. I mean that it the good old American way. I grab what I can and as much as I can for myself and don't worry about the other guys. So of course trucking companies will use the roads and enjoy being exempt from property taxes for doing that and not worry about the freight railroads. But freight railroads do pay property taxes on their right of way and their track and their ties and even on their ballast and spikes. Alfred Perlman observed that railroads, by paying property taxes, are actually subsidizing trucking companies. What are the freight railroads to do? A lot of companies can pack up and move to places that offer them better tax treatment but you can't pack up a railroad track and move it. All you can do is to pay up. While you watch the trucking companies get a free pass.
John WR Sam1What truckers ... do is immaterial to answering the questions. Equally important, Well, yes. Trucking companies do not choose to exempt themselves from property taxes. It is government that gives them that exemption and trucking companies simply take advantage of it. I mean that it the good old American way. I grab what I can and as much as I can for myself and don't worry about the other guys. So of course trucking companies will use the roads and enjoy being exempt from property taxes for doing that and not worry about the freight railroads. But freight railroads do pay property taxes on their right of way and their track and their ties and even on their ballast and spikes. Alfred Perlman observed that railroads, by paying property taxes, are actually subsidizing trucking companies. What are the freight railroads to do? A lot of companies can pack up and move to places that offer them better tax treatment but you can't pack up a railroad track and move it. All you can do is to pay up. While you watch the trucking companies get a free pass.
Truckers pay property taxes on their office space, terminals, etc. They pay inventory taxes, fuel taxes, excise taxes, as well as vehicle and licensing fees. The fuel taxes that they pay are intended to help pay for the highways that they use. Whether their fuel taxes are proportionately fair is another question. The evidence that I have reviewed suggests that they do not, although the spread depends on the type of vehicle, the weight, and the road surface.
The nation's investor owned railroads pay no fuel taxes. They pay property taxes on their office space, terminals, etc. just like the trucking companies. The key comparison, however, is how much do they pay in property taxes on their rights-of-way and is it proportionally more than or less than the fuel, licensing, and other taxes truckers pay for the use of the highways, which are their rights-of-way?
As noted the freight railroads are able to deduct their property taxes, as well as their maintenance expenses, on their income tax return, thereby mitigating the impact of the property taxes. Truckers are able to deduct their property taxes and fuel taxes, but they cannot deduct the cost of maintaining the nation's highways. Until these numbers can be clarified, it is unclear whether the railroads are at a disadvantage.
If the railroads are anything like the large corporation that I worked for, which had huge property tax assessments, they negotiate down the tax assessments. This may be why Norfolk Southern has more than $7 billion in deferred property taxes.
Alfred Perlman could hardly be described as an objective, disinterested observer.
What does this have to do with Amtrak or passenger rail? The freight carriers, irrespective of their tax burdens, are not allowed to pass any of their taxes through to Amtrak.
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