I watched Prez. Obama speaking in Milwaukee this Labor Day, and there were a couple of eye opening remarks.
A.) The government over the next years is going to repair and maintain 150,000 miles of Highways.
B.) The Government was going to lay and maintain 4,000 miles of new railroads.
C.) Various Airport enhancement projects.
This is part of the move to pump an additional $50 billion dollars into the Nations infrastructure.
First of all, I am trying to keep my own personal politics out of this discussion and hopefully others will belay the various methods of character assisination, and look at this in a positive light.
I have not seen the printed version of this speech so I am going on what I heard spoken. If I am in error I welcome corrections and amplifications.
That said: 4,000 miles of railroad is a lot of infrastructure. ( my guess it is somewhere near the figure of lines rationalized in the last 40 years (give or take)
A.)Is the unsoken inferrance, HSR lines?
B.) Relaying part of the National railnet that has been 'rationalized' since the 1960's?
C.) Enhancements to the current National railnet ;(double tracking? projects like CREATE in Chicago?) (Colton overpass in California).
Beefing up maintenance activities on the National Railnet?
Anyone have any specific info on any of the Rail Aspects, I am hopefull it is not political rhetoric.
Just found this link and will post part of the quote from the NYT linked article:
http://www.nytimes.com/2010/09/07/us/politics/07obama.html?_r=1&src=me&ref=us
FTL:"...Over the next six years,” Mr. Obama promised “we are going to rebuild 150,000 miles of our roads — that’s enough to circle the world six times; that’s a lot of road. We’re going to lay and maintain 4,000 miles of our railways — enough to stretch coast-to-coast. We’re going to restore 150 miles of runways and advance a next-generation air-traffic control system to reduce travel time and delays for American travelers — I think everybody can agree on that...”
I sure hope the government is up to the task. The infrastructure of the US is already in such bad shape that something must be done, either now before it crumbles completely, or later after a few more disasters have happened (think Minneapolis bridge, etc).
I frequently wonder (as I bounce out of yet another pothole in the road) how the US got the interstate system built., how we got to the moon a few times, or built the Hoover dam, etc. And then I think of Japan, Germany, and France and their networks of snazzy high-speed railroads.
The Minneapolis bridge collapsed because of a design flaw in the gusset plates. It was not due to "our crumbling infrastructure."
I wonder if we can get the details of this 4000 miles of new railroad.
Sam says, "That said: 4,000 miles of railroad is a lot of infrastructure. ( my guess it is somewhere near the figure of lines rationalized in the last 40 years (give or take)"
I think that in 40 years, that's about how many route miles the C&NW shed by itself, and I wouldn't be surprised if Conrail dropped that many miles in one day, when it was created.
There have been maps floating around (I'm sure I've seen them in both Railway Age and Trains) that show which railroads will not be able to handle the capacity needed by them in the next few decades. I wouldn't be surprised if the 4000 miles would address some of these anticipated deficiencies. I can't see new routes being surveyed, permitted, and built in the six-year timeframe.
The "and maintain" portion of the statement bothers me, if this is what's happening. How would it be maintained independently of existing trackage? If this is not what's happening, and the railroad is to be made on 4000 miles of new right-of-way, who will operate it?
Carl
Railroader Emeritus (practiced railroading for 46 years--and in 2010 I finally got it right!)
CAACSCOCOM--I don't want to behave improperly, so I just won't behave at all. (SM)
.....I believe the President was in some way saying some of this money for the 4,000 mi. of RR, etc....in fact, would be towards HSR.
We do need to be thinking of our countries infrastructure....all of it, and personally, I sure hope we soon begin to.
Item: I'm trying to keep politics out of any comments on this thread as well.
Quentin
Modelcar .....I believe the President was in some way saying some of this money for the 4,000 mi. of RR, etc....in fact, would be towards HSR. We do need to be thinking of our countries infrastructure....all of it, and personally, I sure hope we soon begin to. Item: I'm trying to keep politics out of any comments on this thread as well.
Quentin, and others;
I had no idea of the reductions made in the National Railnet when I made that statement, I was pretty sure the Rationalizations were well in excess of the 4,000 miles mentioned MILW and C&NW would come close by themselves to that, I believe.
In this political sason ( of the looming Miderm elections) I would sure like to have some more details on specifics, Hopefully, Secy Lahood will supply some, and soon! My fervent hope is that it is much more than political rhetoric. We'll just have to wait and see how the details shake out in days to come.
When is the last time you heard somebody announce the construction of 4,000 miles of railroad without mentioning where it would run?
http://www.reuters.com/article/idUSTRE6853DB20100906
The above article says they can get the money by closing tax loopholes on oil companies, which is nice sounding rhetoric for raising our taxes. It makes it sound like oil companies will have to pay for it, and we all hate oil companies, so no problem. It makes it sound like there is an ongoing gift to the oil companies, and if we just take it away from them, it will be free money. But the fact is that if you confiscate $50-billion from the oil companies, it will come right out of our pockets. If it were free money just lying there for the taking, why have we not already taken it?
Creating a new infrastructure bank is one more opportunity to expand government. How many thousands of new, well-paid employees will staff the new infrastructure bank? The president says that the reason for the new bank is to insulate the big spending projects from politics. Well politics is us—we the people, who are supposed to have a voice in how our money gets spent.
The public sector spending machine should not be insulated from the say-so of the public.
I'll bet he means "4000 mile of railroad (track)". That would include all the new ROW in CA and FL (if they can ever get their match together....) and all the second, third, and passing sidings needed for new corridors along existing ROW. But who knows? Politicians don't generally speak RR....
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
When I posted this after the speech in Milwaukee, I was hoping to see some concrete directions for this project to start.
After a couple of days, all I have been able to find is simply re-hashes of the original rhetoric; republished with seemingly inane additional commentary, and very little amplification on the originally stated goals.
4,000 miles is quite a bit of "New Construction' as Carl pointed out. Roughly, what comprised the original C&NW; Johnny pointed out the miles in Florida and California with some passing sidings thrown in come close.
It is beginning to seem as if we have been given another dose of Grandiose Political rhetoric designed to make the first bloom of thought, a statement to overwhelm the individuals' with sheer numbers that are hard to wrap ones mind around when first mentioned.
We keep getting HSR thrown at us as the new 'gold standard' of passenger rail. With the Northeast Corridor being what we will see as large population centers are connected across the country. HSR does not happen overnight and requires much groundwork and lots of weeping and gnashing of teeth and political will. It will not happen here even though we wish it would.
Twenty or thirty years is a political life-span; in this day of twenty- four/seven/three sixty-five and two or three minute sound bites in the Media coverage. Projects seem to move with glacial speeds and the public tires quickly as information moves at time warping speed in comparison and political promises last about as long as a snow flake in ....
Hopefully, we will get some concrete and workable information out of Washington with directions and what we will be expecting.
This is political bull from a perpetual campaigner. Someone will have to write a bill. i am unaware that this step has been taken. The bill will specify what funds will really be spent on what projects. Bill has to get through both houses of Congress. There is an election coming up and all of the house and a third of the senate are up for reelection. They are focused on keeping their plush jobs, nothing else. With luck this will be beneath the surface of the waves by the midterms and after the midterms the Republicans will be able to reign in the craziness of the last two years.
Mac
As we rush headlong towards HSR--seemingly to keep up with those enlightened Europeans who are always more progressive than we are here in the US--I wonder if anyone has done anything as simple as a needs assessment or an ROI analysis? We do endless environmental impact studies, but do we know that anyone in the general public is really interested in HSR or will use it even if they "like" the idea?
A second question: what about the impact of HSR on our airlines? Let's suppose that HSR does, in fact, siphon off passengers that would have gone by air. So then what happens to the jobs that are lost in the process? What are the personal and economic costs? Anyone have an answer?
John Timm
I saw mention of one of the projects going to be covered under the Presidents new program. The project was to fix the BNSF line near Devils Lake, ND. The project will raise the BNSF line high enough so that it will not be flooded as the lake rises to the point where it will create a natural spillway into the Sheyenne River. Canada does not want the US to create a spillway and they will use our courts to block it, however there is nothing they can do if the natural rise of the lake is what creates the spillway. I expect that some of the CREATE projects will be funded under this new program also.
beaulieu I saw mention of one of the projects going to be covered under the Presidents new program. The project was to fix the BNSF line near Devils Lake, ND. The project will raise the BNSF line high enough so that it will not be flooded as the lake rises to the point where it will create a natural spillway into the Sheyenne River. Canada does not want the US to create a spillway and they will use our courts to block it, however there is nothing they can do if the natural rise of the lake is what creates the spillway. I expect that some of the CREATE projects will be funded under this new program also.
Can you/will you please provide a source for the information about the Devils Lake project?
Please see Fred Frailey's column in August 2010 Trains. This would be an incredible waste of economic resources at a time when we have none to waste.
If what you say is true, it needs to be stopped. It's bad enough that they want to divert resources from the energy sector, and basically impose an increased fuel tax on everybody from commuters to farmers during a bad recession, but totally wasting the money on projects like this is beyond comprehension. No rational, thinking human being would propose this.
greyhounds Can you/will you please provide a source for the information about the Devils Lake project? Please see Fred Frailey's column in August 2010 Trains. This would be an incredible waste of economic resources at a time when we have none to waste. If what you say is true, it needs to be stopped. It's bad enough that they want to divert resources from the energy sector, and basically impose an increased fuel tax on everybody from commuters to farmers during a bad recession, but totally wasting the money on projects like this is beyond comprehension. No rational, thinking human being would propose this.
The message was in one of the yahoogroups that I am a member of. The project rates the highest for the North Dakota delegation. If they let the BNSF go it is likely to be permanently gone, and the adjacent highway would go also (any bets the highway would be rebuilt). It would make less sense to save the highway without raising the railroad line. The ND delegation is concerned that it is the only E-W line in the northern half of the state, closure would certainly result in loss of Amtrak service to Grand Forks and much more circuity for PNW grain from Northeastern North Dakota.
According to Frailey grain movements won''t be affected by loss of the line. In fact, it's closure would have no effect on any freight movements because the BNSF has ceased using the part of the line that will be flooded.
The only trains over the line are the two Amtrak trains each day.
One has to wonder where this Devil's Lake Project was when the first Stimulus was for 'Shovel Ready' infrastructure investment when that was/is being parceled out.
I tend to see in Mac's post and John Timm's as well a rising level of frustrated skepticism as the Washington Politician seem to be much more interested in various enviromental impacts than the impacts on our countries financial strengths.
The entire country seems to be innoculated with a skepticism born of their frustration of the apparent current governmental desires to attempt to cure problems with money, pumped out in volumns similar to water from a fire hose onto a fire. It is a play on the old, 'if a little is effective, a whole lot will overwhelm.'
There have been a number of photos published from time to time of the Devil's Lake line with its water seemingly up close to the ballast line of the roadbed. It is a beautiful scenic area. No one has said if this is a naturally occcuring lake, or if it is an empoundment enhanced by the ROW of the railroad? If it is a natural lake, I would expect that there would be a natural outfall for the waters. Does anyone have any ideas or information on it. Sounds lie the local delegation in ND wants the rail line in place and the seemingly only thing thing that will keep it in place, is a large, unknown infusion of Govrnment Funds in presently unknown amounts (?).
samfp1943 One has to wonder where this Devil's Lake Project was when the first Stimulus was for 'Shovel Ready' infrastructure investment when that was/is being parceled out.
I'm wondering why they want to spend money there now, in a state with an unemployment rate of only 3.6%
nanaimo73 samfp1943: One has to wonder where this Devil's Lake Project was when the first Stimulus was for 'Shovel Ready' infrastructure investment when that was/is being parceled out. I'm wondering why they want to spend money there now, in a state with an unemployment rate of only 3.6%
samfp1943: One has to wonder where this Devil's Lake Project was when the first Stimulus was for 'Shovel Ready' infrastructure investment when that was/is being parceled out.
Dale:
Good question! You can bet somewhere around (currentl) 59 % of the American population is probably right there with you.
I've never seen the Devils Lake area, but looking at maps it appears to me that there is about 1000 feet of highway and roadbed east of the town that could be endangered. Is that correct? I would think that raising the roadbed and putting in a few culverts is not a major project.
Perhaps BNSF has concluded that track is not needed for freight purposes as shipments originating north or east of there can go south to Fargo and then west.. If so, then North Dakota and Amtrack are faced with the Raton Pass situation. Also, perhaps all BNSF wants is some financial assistance with raising the track.
greyhounds If what you say is true, it needs to be stopped. It's bad enough that they want to divert resources from the energy sector, and basically impose an increased fuel tax on everybody from commuters to farmers during a bad recession, but totally wasting the money on projects like this is beyond comprehension. No rational, thinking human being would propose this.
I agree that no rational thinking human being would propose this, but this is Keynesian economic theory, which says the governments can create prosperity simply by spending the peoples’ money. It makes no difference what they spend it on or what they get in return.
Keynesian economics says that the government can prevent recessions and depressions just by turning on the magical, instant-prosperity-making machine of government stimulus spending. It is not a rational idea. Rational human beings know that when they are on the verge of running out of money, it doesn’t help to spend it faster. And they especially understand that it makes no sense to spend your last dollars with no concern about what you get in return.
One effect of the theory that everyone can see to be true is that it makes government larger and more prosperous because government must manage the spending programs. John Maynard Keynes also happened to believe in big government, so it is handy that he came up with a stimulus theory that just happens to expand government as a side effect to its main goal.
Some people believe in Keynesian economics and some don’t. Our so-called economic stimulus spending is a practical test of Keynesian economic theory on the grandest scale the world has ever experienced. So, soon we will know once and for all if it works or not.
Bucyrus Some people believe in Keynesian economics and some don’t. Our so-called economic stimulus spending is a practical test of Keynesian economic theory on the grandest scale the world has ever experienced. So, soon we will know once and for all if it works or not.
Re taking it from the oil companies:
No corporations are tax payers. They are tax collectors. If the government increases the taxes on corporations (not just the oil companies, but all corporations) they will pass it through to us, the ultimate consumers, in the form of higher product prices. I hope we are ready for $5-7 per gallon gasoline costs as Europe has.
FYI: Many corporations are not paying one dime to the IRS anyway, although they may be paying taxes to other countries. Eg. Exxon. Corporate tax is calculated on net income after first deducting all the tax credits they are given. The notion that we should not tax corporations because they will pass it on by raising prices to the end consumer is just oil company advertising, but isn't the reality. I for one am not to thrilled with the idea of paying more in taxes than Exxon or GE have in some fiscal years. It seems especially unfair when you consider we have spent over 1.1 trillion dollars on Mideast wars that, in part at least, have served the interests of protecting the oil company's sources. Perhaps they should pay a "user fee" for protective services?
C&NW, CA&E, MILW, CGW and IC fan
oltmannd Bucyrus: Some people believe in Keynesian economics and some don’t. Our so-called economic stimulus spending is a practical test of Keynesian economic theory on the grandest scale the world has ever experienced. So, soon we will know once and for all if it works or not. I don't think we will know. We don't know what the outcome would have been if different choices were made. We'd have to wind the clock back and replay.
Bucyrus: Some people believe in Keynesian economics and some don’t. Our so-called economic stimulus spending is a practical test of Keynesian economic theory on the grandest scale the world has ever experienced. So, soon we will know once and for all if it works or not.
Yes, sadly you are correct. There will be those who continue believe in the magic cornucopia of Keynesian stimulus even if it collapses our economic world. They will steadfastly maintain that the cause was due to what somebody else did.
Even if you proved it with a side-by-side experiment of Keynesian stimulus versus no stimulus, and the results were plain to see in favor of the non-stimulus; the Keynesians would argue that it was not a fair test because they ran out of money to spend.
schlimm FYI: Many corporations are not paying one dime to the IRS anyway, although they may be paying taxes to other countries. Eg. Exxon. Corporate tax is calculated on net income after first deducting all the tax credits they are given. The notion that we should not tax corporations because they will pass it on by raising prices to the end consumer is just oil company advertising, but isn't the reality. I for one am not to thrilled with the idea of paying more in taxes than Exxon or GE have in some fiscal years. It seems especially unfair when you consider we have spent over 1.1 trillion dollars on Mideast wars that, in part at least, have served the interests of protecting the oil company's sources. Perhaps they should pay a "user fee" for protective services?
No, it's very much reality.
Only people pay taxes. Corporations only have three sources of money to pay the taxes. (Or any other expense for that matter.) All three sources are people. They can get it from their customers. They can get it from their employees. And they can get it from their investors. There is no other place for them to get the money.
For customers this tax will mean higher fuel prices. This will decrease their buying power and further harm the economy. Eventually, all costs go through to the end users. i.e. us.
For employees, this tax will mean fewer job oportunities. The higher fuel prices will reduce the demand and result in less employment. People who would have had a good job with an energy company now won't. The oil companies will write fewer pay checks.
For investors, this tax will mean a lower return on their investment. This will decrease their incentive to invest in energy production. This will further reduce the supply of fuel and make the price even higher. This will also mean fewer employess.
That's reality. You can't wish it away or pass a law against it. It's reality.
As to paying after "Tax Credits". No, they pay after expenses. Revenue less expenses is their income and that's what they pay income tax on. The fact that in some years a company's expenses exceed their revenue resulting in no income is just a fact of life. What do you want to do? Charge a "Loss Tax"?
I support the idea of a flat tax. This would eliminate all "Tax Credits" (or "Tax Breaks") for everyone and simply take a fixed percentage of revenue after expenses. But having done that, corporations will still only collect and forward taxes to the government. They will collect them from very real people. Only people pay taxes.
Ken: Forgive my misconstruction of the sequence of tax calculation (of course it is net income on which the tax is calculated and then credits, if any, are subtracted from that obligation). But you are missing my larger point. Exxon paid no US income tax in a year in which they had profits of over 40 billion dollars, not a loss. Ditto GE on a large profit also. And the idea that the corporate tax is just passed on is not necessarily so. The corporations cannot simply price their goods/product at whatever they want to cover anticipated taxes, as the market will have the major determination of price. You, as a supporter of market capitalism know that as well as anyone.
Your slogan about where corporations get money from is a little bit disingenuous. Where do people get their money from? Each other and from corporations because they are all intertwined. That's a national economy.
I do agree with you that a (tiered, not totally flat) rate, simple (no deductions, but some short-term credits) for both corporate and individual income tax is an excellent idea, coupled with some sort of VAT so everyone contributes, as they should. Unfortunately, the current system does not.
For what it's worth, we spent some time on this question in a couple of my economics classes a good many years ago. It wasn't Econ 101, but maybe 102, or the 3rd one, the Antitrust course instead . . .
Anyway, as best as I can recall it - and somewhat surprisingly - the economic theory is that the amount of the tax that the corporation has to absorb and pay itself - instead of passing it on/ through to its customers - depends on where that market is on the spectrum of pure competition vs. pure monopoly, or of course someplace in between. It has to do with the "elasticity" curve of price vs. demand and marginal revenue, etc. - but don't ask me for the details, because it was too long ago.
Again surprisingly, the monopoly-like corporations have to 'eat' the tax from their profits, because they're already at the 'sweet spot' of charging all the market can bear at the point of volume to maximize their profits - if they raise their prices much to compensate, their volume falls below that optimum point, and the profit margin suffers also.
In pure competition markets, the tax does get passed onto the consumer. All the producers are operating at a slim profit margin, so they have no choice but to pass it on - if they 'eat' it, they will be operating at a loss and go out of business. Since they all pass it on, none are disadvantaged with respect to the others, and so the tax is ultimately borne by the consumer.
And 'in between' is 'in between'.
The railroad connection with all this ? The theory applied and still applies to them, too - are they a monopolistic "bottle-neck" carrier, or one of the 7 granger roads from Chicago to Omaha or some such.
If we have a professor or someone who has a degree in economics in the house, I'll gladly yield the floor and this explanation to said person, who should feel free to correct any mistakes or misunderstanding in the above - no offense will be taken, I assure you.
- Paul North.
schlimm Ken: Forgive my misconstruction of the sequence of tax calculation (of course it is net income on which the tax is calculated and then credits, if any, are subtracted from that obligation). But you are missing my larger point. Exxon paid no US income tax in a year in which they had profits of over 40 billion dollars, not a loss. Ditto GE on a large profit also. And the idea that the corporate tax is just passed on is not necessarily so. The corporations cannot simply price their goods/product at whatever they want to cover anticipated taxes, as the market will have the major determination of price. You, as a supporter of market capitalism know that as well as anyone. Your slogan about where corporations get money from is a little bit disingenuous. Where do people get their money from? Each other and from corporations because they are all intertwined. That's a national economy. I do agree with you that a (tiered, not totally flat) rate, simple (no deductions, but some short-term credits) for both corporate and individual income tax is an excellent idea, coupled with some sort of VAT so everyone contributes, as they should. Unfortunately, the current system does not.
It's not a slogan, it's a fact. If you won't believe me will you believe the Congressional Budget Office?
"Economists recognize that the incidence--that is, the distribution of the burden of such taxation--falls ultimately on individuals and not oncorporations." And! "A corporation may write its check to the Internal Revenue Service for payment of the corporate income tax, but that money must come from somewhere: from reduced returns to investors in the company, lower wages to its workers, or higher prices that consumers pay for the products the company produces." And! "In the very long term, the burden is likely to be shifted in part to labor, if the corporate tax dampens capital accumulation." Here's the full CBO paper: http://www.cbo.gov/ftpdocs/3xx/doc304/corptax.pdf Now that's just exactly what I said. Corporations, and any other form of business orgainization, do not pay taxes. They collect taxes from their customers, their investors, and their labor force and pass it on to the government. If anyone actually believes that we're going to get 4,000 miles of new railroad track and nobody (as in no person) is going to pay for it - I've got some top of the line snake oil for sale. Might as well buy some more while you're at it. As to Paul's point that some businesses just have to "eat" a tax increase. They can't. They've got to get the money from somewhere. The equation has remained unchanged for centuries. Assets = Liabilities + Owners' Equity. If the tax liabilty goes up the assets aren't going to change. That means the Owners' Equity goes down. In the short run the investors (who are, after all, people) will be the ones who suffer, but in the long run the burden will be dispersed to customers and labor. What I never said what that the business could pass the tax costs along to customers dollar for dollar. As you correctly point out, they've got a market restraint on what they can charge. But any increased taxation will be reflected in increased marginal costs for all competitors in a line of trade. This uniform increase in marginal costs will facilitate some pass through, but not make it dollar for dollar. The end result will be less production, less employment, and higher prices. And that's a fact, not a slogan. Those 4,000 miles of track are going to come out of our bank accounts.
"Economists recognize that the incidence--that is, the distribution of the burden of such taxation--falls ultimately on individuals and not oncorporations."
And!
"A corporation may write its check to the Internal Revenue Service for payment of the corporate income tax, but that money must come from somewhere: from reduced returns to investors in the company, lower wages to its workers, or higher prices that consumers pay for the products the company produces." And! "In the very long term, the burden is likely to be shifted in part to labor, if the corporate tax dampens capital accumulation." Here's the full CBO paper: http://www.cbo.gov/ftpdocs/3xx/doc304/corptax.pdf Now that's just exactly what I said. Corporations, and any other form of business orgainization, do not pay taxes. They collect taxes from their customers, their investors, and their labor force and pass it on to the government. If anyone actually believes that we're going to get 4,000 miles of new railroad track and nobody (as in no person) is going to pay for it - I've got some top of the line snake oil for sale. Might as well buy some more while you're at it. As to Paul's point that some businesses just have to "eat" a tax increase. They can't. They've got to get the money from somewhere. The equation has remained unchanged for centuries. Assets = Liabilities + Owners' Equity. If the tax liabilty goes up the assets aren't going to change. That means the Owners' Equity goes down. In the short run the investors (who are, after all, people) will be the ones who suffer, but in the long run the burden will be dispersed to customers and labor. What I never said what that the business could pass the tax costs along to customers dollar for dollar. As you correctly point out, they've got a market restraint on what they can charge. But any increased taxation will be reflected in increased marginal costs for all competitors in a line of trade. This uniform increase in marginal costs will facilitate some pass through, but not make it dollar for dollar. The end result will be less production, less employment, and higher prices. And that's a fact, not a slogan. Those 4,000 miles of track are going to come out of our bank accounts.
"A corporation may write its check to the Internal Revenue Service for payment of the corporate income tax, but that money must come from somewhere: from reduced returns to investors in the company, lower wages to its workers, or higher prices that consumers pay for the products the company produces."
"In the very long term, the burden is likely to be shifted in part to labor, if the corporate tax dampens capital accumulation." Here's the full CBO paper: http://www.cbo.gov/ftpdocs/3xx/doc304/corptax.pdf Now that's just exactly what I said. Corporations, and any other form of business orgainization, do not pay taxes. They collect taxes from their customers, their investors, and their labor force and pass it on to the government. If anyone actually believes that we're going to get 4,000 miles of new railroad track and nobody (as in no person) is going to pay for it - I've got some top of the line snake oil for sale. Might as well buy some more while you're at it. As to Paul's point that some businesses just have to "eat" a tax increase. They can't. They've got to get the money from somewhere. The equation has remained unchanged for centuries. Assets = Liabilities + Owners' Equity. If the tax liabilty goes up the assets aren't going to change. That means the Owners' Equity goes down. In the short run the investors (who are, after all, people) will be the ones who suffer, but in the long run the burden will be dispersed to customers and labor. What I never said what that the business could pass the tax costs along to customers dollar for dollar. As you correctly point out, they've got a market restraint on what they can charge. But any increased taxation will be reflected in increased marginal costs for all competitors in a line of trade. This uniform increase in marginal costs will facilitate some pass through, but not make it dollar for dollar. The end result will be less production, less employment, and higher prices. And that's a fact, not a slogan. Those 4,000 miles of track are going to come out of our bank accounts.
"In the very long term, the burden is likely to be shifted in part to labor, if the corporate tax dampens capital accumulation."
Here's the full CBO paper:
http://www.cbo.gov/ftpdocs/3xx/doc304/corptax.pdf
Now that's just exactly what I said. Corporations, and any other form of business orgainization, do not pay taxes. They collect taxes from their customers, their investors, and their labor force and pass it on to the government. If anyone actually believes that we're going to get 4,000 miles of new railroad track and nobody (as in no person) is going to pay for it - I've got some top of the line snake oil for sale. Might as well buy some more while you're at it.
As to Paul's point that some businesses just have to "eat" a tax increase. They can't. They've got to get the money from somewhere. The equation has remained unchanged for centuries. Assets = Liabilities + Owners' Equity. If the tax liabilty goes up the assets aren't going to change. That means the Owners' Equity goes down. In the short run the investors (who are, after all, people) will be the ones who suffer, but in the long run the burden will be dispersed to customers and labor.
What I never said what that the business could pass the tax costs along to customers dollar for dollar. As you correctly point out, they've got a market restraint on what they can charge. But any increased taxation will be reflected in increased marginal costs for all competitors in a line of trade. This uniform increase in marginal costs will facilitate some pass through, but not make it dollar for dollar. The end result will be less production, less employment, and higher prices.
And that's a fact, not a slogan. Those 4,000 miles of track are going to come out of our bank accounts.
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