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[quote]QUOTE: <i>Originally posted by gabe</i> <br /><br />Dave, <br /> <br />I mean this politely. But, I really am starting to see your argument as wanting your cake and eating it too or wanting someone else to pay for your cake. <br /> <br />(1) More competition equals more profits? Maybe more profit for the companies served, but surely not by the railroad. If competition equaled profit, there would be no need for anti-trust regulation. Are you really saying more competition equals more profit to you or your interests? <br /> <br />(2) Not "the" reason but "a" reason highway, waterway, and open-access European rail is successful is subsidy. To think that open access in America will profit American railroads without a like subsidy is like removing ham from ham and bean soup and expect it to taste the same. I suspect you would be one of the first people to cry when taxes were heightened to pay for the subsidy to allow railroads to function on an open access system. <br /> <br />Worse yet (for me), the requisite subsidy to make railroads work under your system would effectively make me (as a tax payer) subsidize the customer (yet again). I see your argument really coming down to you want someone else (the American tax payer) to pay for someone else’s (rail customer) benefit. <br /> <br />Gabe <br />[/quote] <br /> <br />Gabe, <br /> <br />Do you conversely think competition is a negative? Most economists outside the socialist faction surely wouldn't say so. <br /> <br />Competition is the essential element that makes a free market economy work. Competition forces innovation, innovation improves the customer base, and an increased customer base usually equals more profits for the best innovators. Without competition, there is less incentive to innovate. Monopolistic and oligarchic companies can become risk averse, and innovation subsequently becomes scarce. They begin to buy the notion of the zero sum gain (a favorite of the left), and thus when new ideas come along they see it as you described in your opening paragraph e.g. the innovators want to have their cake and eat it too, or to put it another way, the idea of synthesis becomes a nonparlance. <br /> <br />Also, be careful how you define subsidy. Is a user fee a subsidy? I would not say it is. Since the majority of highway funding comes from user fees as it pertains to interstate freight transportation, it is not out of the question that such could work for an open access rail system. John Kneiling thought so 30 years ago, before the term open access was even applied. He just thought correctly that the proprietary closed system was a waste of macro capital, since each rail transporter just had to have their own set of rails, rather than having multiple rail transporters share common trackage, not to mention the fact that under the closed access system the failure of a rail service provider meant the loss of the tracks that went with it. Under an open access system, the failure of a rail transporter will not harm the existence of the tracks, since the tracks are held under a separate entity. <br /> <br />Is a tax credit for maintenance a subsidy? The shortline tax credit recently passed by the feds is something that could be expanded for use on a privately owned open access rail system. And before you say that a tax credit means someone else pays higher taxes to make up for the loss in tax revenue from the recipient of the tax credit, isn't it true that infrastructure improvements provide an important incentive for retaining and recruiting rail using businesses, thus actually expanding your tax base? Remember that if the tax credit means the rail lines can stay up on maintenance and thus provide a secure reliable ROW for rail transporters (on a more equalized basis with highways and waterways), the users of rail services will be more inclined to stay in the U.S. rather than relocating overseas, or change their minds about shutting down a factory in lieu of non capital intensive investments, or expanding the planting of grains in a field rather than putting a field into a conservation plan. Since a tax credit is something not sent to the federal treasury, you in essence get 100% of the return, whereas a de facto subsidy oft times returns as little as 20% on the dollar of original tax payment (with the rest going to fund the bureaucracy). <br /> <br />So you see, it is very probable to create an open access rail system without tapping the general fund or raising your taxes. Generally, I wouldn't have the confidence in the feds to not use tax receipts for such a venture, but given that they took the tax credit route for the short line maintenance bill, I believe they would take the same general approach for supporting a transistion to an open access rail system. <br /> <br />Of course, no such action is perfect. I would think that an open access ROW would be exempted by federal decree from state and local property taxes (one part of the "equalization" ideal), and thus those entities would have to make up for that loss of tax revenue in other ways. But some of those same locales would benefit from increased industrial investment, so at least they can make up for it. <br /> <br />To sum up, I believe an open access rail system can be supported without tapping the general tax fund, via user fees, maintenance tax credits, and property tax exemptions. I personnally am not opposed to using part of the highway trust fund as an additional supporting tool, but some might object. The easiest way to facilitate that is to tax all modes with the same federal fuel tax, and then lump all the revenues into an infrastructure trust fund, with each mode getting a guaranteed percentage of what they pay in, with some wiggle room for multimodal projects and general cross funding. <br /> <br />They proved in the 1980's that a nation can cut taxes and in return get higher tax receipts, so in that vein you can have your cake and eat it too. By reducing the capital funding burden on railways via tax credits and tax exemptions, and then opening up all major rail lines to head to head competition (resulting in additional infrastructure funding from an increase in rail transporter paying some sort of user fee), you can kill two birds with one stone e.g. reducing the transporter's share of capital outlay for infrustructure while also providing rail shippers with market based rate and service competition. Trust me on this one, fostering head to head rail transporter competition will end up increasing rail's macro share of the intercity freight market, because potential users of rail service will be more likely to fulfill that potential. Granted, some transporters will fall by the wayside, but those that do it right will prosper (as will their stockholders).
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