QUOTE: Originally posted by futuremodal Quothe Ed H of the AAR: "Railroads and barges are currently the only modes of transportation that pay a fuel tax into the general fund," said Association of American Railroads President and Chief Executive Officer Edward Hamberger in a prepared statement. "Fuel taxes paid by other modes go to support their right-of-way while #8230; railroads pay virtually all of the costs to maintain and improve their infrastructure. We urge President Bu***o sign [the bill] into law." If as expected the repeal of the 4.3 cents per gallon fuel tax on railroads and barge lines comes into effect, does anyone think that the railroads will take this tax break and apply it to their infrastructure needs for which they are begging for federal aid? Doubtful. It would have been better for the feds to take this 4.3 cents and use it to pay for the eventual federal intervention into rail infrastructure upgrades that are being lobbied for by the railroads. In an ironic twist, instead of the railroads paying into the general fund, they will now be taking from the general fund. As usual, it is the average Joe taxpayer who ends up getting screwed.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
QUOTE: Originally posted by Junctionfan We would all be better off if our governments put a price freeze on gas prices. Taxes need to be collect but the oil companies don't need to make that much money. They prove when the price at the pumps goes up and down like a teeter-totter.
QUOTE: Originally posted by oltmannd QUOTE: Originally posted by Junctionfan We would all be better off if our governments put a price freeze on gas prices. Taxes need to be collect but the oil companies don't need to make that much money. They prove when the price at the pumps goes up and down like a teeter-totter. What do you mean they don't "need" that much? They "need" to make money for their owners. The free market sets the price, not the oil companies! Gasoline is a commodity. It just follows crude price. You freeze gasoline prices below the cost to produce and who would be willing to sell it to me? Crude price is pure supply and demand - although there is a bubble, currently, at least according to the NPR business report I heard last night. I don't care what it costs as long as I can get it and there isn't rationing! If the cost stays high, it will change my behaviour. In fact, the high cost of gasoline is the BEST thing that could happen to Amtrak/transit.
QUOTE: Originally posted by Junctionfan QUOTE: Originally posted by oltmannd QUOTE: Originally posted by Junctionfan We would all be better off if our governments put a price freeze on gas prices. Taxes need to be collect but the oil companies don't need to make that much money. They prove when the price at the pumps goes up and down like a teeter-totter. What do you mean they don't "need" that much? They "need" to make money for their owners. The free market sets the price, not the oil companies! Gasoline is a commodity. It just follows crude price. You freeze gasoline prices below the cost to produce and who would be willing to sell it to me? Crude price is pure supply and demand - although there is a bubble, currently, at least according to the NPR business report I heard last night. I don't care what it costs as long as I can get it and there isn't rationing! If the cost stays high, it will change my behaviour. In fact, the high cost of gasoline is the BEST thing that could happen to Amtrak/transit. The price is at one point in Ontario, 89 cents a litre and as low as 50 cents and it goes up and down and is inconsistant in pricing. Esso oil in Simcoe maybe 67 cents but the next one in Niagara Falls is 87 cents. This leaves me to conclude that they are engaging in unfair price setting and should be frozen at a rate that reflects a profit to them but at the same time fair also for the consumer. I don't believe for a second that thease oil companies are loosing money.
QUOTE: Originally posted by Limitedclear QUOTE: Originally posted by futuremodal Quothe Ed H of the AAR: "Railroads and barges are currently the only modes of transportation that pay a fuel tax into the general fund," said Association of American Railroads President and Chief Executive Officer Edward Hamberger in a prepared statement. "Fuel taxes paid by other modes go to support their right-of-way while #8230; railroads pay virtually all of the costs to maintain and improve their infrastructure. We urge President Bu***o sign [the bill] into law." If as expected the repeal of the 4.3 cents per gallon fuel tax on railroads and barge lines comes into effect, does anyone think that the railroads will take this tax break and apply it to their infrastructure needs for which they are begging for federal aid? Doubtful. It would have been better for the feds to take this 4.3 cents and use it to pay for the eventual federal intervention into rail infrastructure upgrades that are being lobbied for by the railroads. In an ironic twist, instead of the railroads paying into the general fund, they will now be taking from the general fund. As usual, it is the average Joe taxpayer who ends up getting screwed. Dave- You really need to actually read the legislation before criticizing. The repeal is phased in over several years amounting to less than a penny per gallon annually. Most railroads, even Class 1s will receive minimal benefits. Really the UP and BNSF as the largest U.S. railroads will be the only ones receving much benefit at all. In any event, other modes (highway, barge, air) have the benefit of trust funds funded by their various fees and taxes while rail doesn't. Rail doesn't want to have a trust fund, the railroads would rather be left alone. While we're on the subject railroads already pay heavy property tax on their infrastructure that the other modes don't which more than makes up for the kind of differential in taxes. LC
QUOTE: Originally posted by futuremodal QUOTE: Originally posted by Limitedclear QUOTE: Originally posted by futuremodal Quothe Ed H of the AAR: "Railroads and barges are currently the only modes of transportation that pay a fuel tax into the general fund," said Association of American Railroads President and Chief Executive Officer Edward Hamberger in a prepared statement. "Fuel taxes paid by other modes go to support their right-of-way while #8230; railroads pay virtually all of the costs to maintain and improve their infrastructure. We urge President Bu***o sign [the bill] into law." If as expected the repeal of the 4.3 cents per gallon fuel tax on railroads and barge lines comes into effect, does anyone think that the railroads will take this tax break and apply it to their infrastructure needs for which they are begging for federal aid? Doubtful. It would have been better for the feds to take this 4.3 cents and use it to pay for the eventual federal intervention into rail infrastructure upgrades that are being lobbied for by the railroads. In an ironic twist, instead of the railroads paying into the general fund, they will now be taking from the general fund. As usual, it is the average Joe taxpayer who ends up getting screwed. Dave- You really need to actually read the legislation before criticizing. The repeal is phased in over several years amounting to less than a penny per gallon annually. Most railroads, even Class 1s will receive minimal benefits. Really the UP and BNSF as the largest U.S. railroads will be the only ones receving much benefit at all. In any event, other modes (highway, barge, air) have the benefit of trust funds funded by their various fees and taxes while rail doesn't. Rail doesn't want to have a trust fund, the railroads would rather be left alone. While we're on the subject railroads already pay heavy property tax on their infrastructure that the other modes don't which more than makes up for the kind of differential in taxes. LC Yes, I did read the legislation, but you missed the point. It is irrelevant if it is phased in over several years or all at once. The point I'm trying to make is that the money the railroads save from the repeal of the tax more than likely will not go into infrastructure improvements, rather it will go into stock options, lobbying, non-rail investments, etc. We've discussed this before, the railroads will downsize the labor force and defer maintenance to sex up the balance sheet, instead of spending on capital improvements to speed up and flex up operating capacity, which in turn would lead to more business. What galls me more than anything is the attempt by the railroads to get the feds to aid in paying for infrastructure improvements after all the financial chicanery that goes on. This goes on because of the limited playing field in which would be rail competitors can only dream of entry. Since we don't (yet) have a separation of operating companies from infrastructure owning companies (which would solve the problem of open accountability for infrastructure spending), it may be necessary for the feds to slap a fuel tax on railroads and use this money as a trust fund for rail infrastructure improvements. In a sense, the feds would force the railroads via this user fee to spend the necessary funds for infrastructure which the railroads themselves are loathe to spend due to the dichotomy of the opposing forces playing in the background of railroad finances: On the one hand we have the inherent inefficiencies of monoplolistic/oligarchial behaviour which force the tendency of disincentive for optimal capitalistic actions, and on the other hand the forces of Wall Street which demand ROI's in the mode of the technology sector, an impossibility for capital intensive industries.
QUOTE: Originally posted by gabe Because there isn't enough disagreement on this issue already: Dave, I certainly understand your assertion that subsidies--in all their various forms--are a poor idea because the "subsidy" doesn't go into the railroad's physical plant but lines investor's pockets. Presumably your ultimate contention is that it might be worth the money to improve our nation's transportation system if that is where the "subsidy" goes--which would in turn improve commerce, create jobs, etc.--but it is not worth the money to line investor's pockets, which is where the "subsidy" really goes. I am not taking issue with your ultimate conclusion. However, have you considered the possibility that railroad's using the "subsidy" to line investor pockets might lead to a bigger improvement of the railroad's physical plant than if the subsidy had gone directly to improving the railroad's physical plant? If railroads conclude that the best way to get the investment they need to make themselves viable in the future is to convince Wall Street that they are profitable and the amount of physical plant improvement that they could get from a meager subsidy would be miniscule in comparison, wouldn't the better course of action be--for both the railroad and the nation--to line investor pockets in the hope of bringing more investors to provide the money to make meaningful improvements to the physical plant? I am not asserting this contention trumps your view. A detailed look at the numbers would be required to determine whether this view is plausible. Gabe
QUOTE: Originally posted by Limitedclear QUOTE: Originally posted by futuremodal QUOTE: Originally posted by Limitedclear QUOTE: Originally posted by futuremodal Quothe Ed H of the AAR: "Railroads and barges are currently the only modes of transportation that pay a fuel tax into the general fund," said Association of American Railroads President and Chief Executive Officer Edward Hamberger in a prepared statement. "Fuel taxes paid by other modes go to support their right-of-way while #8230; railroads pay virtually all of the costs to maintain and improve their infrastructure. We urge President Bu***o sign [the bill] into law." If as expected the repeal of the 4.3 cents per gallon fuel tax on railroads and barge lines comes into effect, does anyone think that the railroads will take this tax break and apply it to their infrastructure needs for which they are begging for federal aid? Doubtful. It would have been better for the feds to take this 4.3 cents and use it to pay for the eventual federal intervention into rail infrastructure upgrades that are being lobbied for by the railroads. In an ironic twist, instead of the railroads paying into the general fund, they will now be taking from the general fund. As usual, it is the average Joe taxpayer who ends up getting screwed. Dave- You really need to actually read the legislation before criticizing. The repeal is phased in over several years amounting to less than a penny per gallon annually. Most railroads, even Class 1s will receive minimal benefits. Really the UP and BNSF as the largest U.S. railroads will be the only ones receving much benefit at all. In any event, other modes (highway, barge, air) have the benefit of trust funds funded by their various fees and taxes while rail doesn't. Rail doesn't want to have a trust fund, the railroads would rather be left alone. While we're on the subject railroads already pay heavy property tax on their infrastructure that the other modes don't which more than makes up for the kind of differential in taxes. LC Yes, I did read the legislation, but you missed the point. It is irrelevant if it is phased in over several years or all at once. The point I'm trying to make is that the money the railroads save from the repeal of the tax more than likely will not go into infrastructure improvements, rather it will go into stock options, lobbying, non-rail investments, etc. We've discussed this before, the railroads will downsize the labor force and defer maintenance to sex up the balance sheet, instead of spending on capital improvements to speed up and flex up operating capacity, which in turn would lead to more business. What galls me more than anything is the attempt by the railroads to get the feds to aid in paying for infrastructure improvements after all the financial chicanery that goes on. This goes on because of the limited playing field in which would be rail competitors can only dream of entry. Since we don't (yet) have a separation of operating companies from infrastructure owning companies (which would solve the problem of open accountability for infrastructure spending), it may be necessary for the feds to slap a fuel tax on railroads and use this money as a trust fund for rail infrastructure improvements. In a sense, the feds would force the railroads via this user fee to spend the necessary funds for infrastructure which the railroads themselves are loathe to spend due to the dichotomy of the opposing forces playing in the background of railroad finances: On the one hand we have the inherent inefficiencies of monoplolistic/oligarchial behaviour which force the tendency of disincentive for optimal capitalistic actions, and on the other hand the forces of Wall Street which demand ROI's in the mode of the technology sector, an impossibility for capital intensive industries. I can see that we will never agree on many things. The level of financial manuvering in the railroad industry is minimal compared to many other industries and the concept of open access isn't going to happen anytime soon so I wouldn't hold my breath. The idea of slapping big taxes on the rail industry is simply reregulation dressed up in different clothing with the same inevitable result, driving major railroads to bankruptcy and forcing more downsizing of the railroads making rail service more difficult to obtain and further marginalizing the rail industrys ability to move commerce. That "plan" has been tried already and failed miserably. You must LOVE trucks. Got anything new? LC
QUOTE: Originally posted by Limitedclear Dave- Its a good thing that we still have that pesky Constitution that makes what you are suggesting not only illegal but unconstitutional. What you suggest is confiscatory in more than one way and I hate to break it to you, but when you want to tax someone and/or force them to spend capital in a particular way at best that is reregulation and at worst outright confiscation. We live in a free enterprise system, where do you live? LC
QUOTE: Originally posted by M.W. Hemphill Hmm. I easily get lost in this stuff. I don't understand this. My understanding it that if a business starts paying a tax, it must reduce its expenses by an identical amount if it's to continue to deliver to the investors the same percentage of revenue it did before. Suppose last year a railroad took in $1, spent 90 cents on fixed and variable costs, and delivered 10 cents to the investors. This year, it has a 10% tax. It still takes in $1, pays 10 cents tax, but to deliver 10 cents it can only spend 80 cents. If the tax doesn't come back in kind or in cash, the business is already out 11% of the money it used to have to meet expenses. But the 10 cents, the government says, is going to be reinvested in the property: "You'll still get 90 cents of your revenue dollar invested into the property, and you'll still be able to hand 10 cents to the investor." So where is additional investment coming from? I don't understand how additional investment in the property could possibly occur unless the investor starts agreeing to take a smaller percentage of revenue. What is different is that the government is making the investment decisions instead of the managers. Maybe the government is smarter, who knows? But the first think I think I'm going to do is help them be smart by spending a cent of my revenue dollar buying them drinks and telling them that they'll look bold and wise if so they spend 15 cents for every one of my revenue dollars on my railroad and 5 cents on someone else's railroad, because "everyone knows that property is hopeless." I hope my competitor doesn't think of that. I guess the counterargument is that the government will spend its 10 cents so wisely that the revenue and profitablity of the company will grow and all will be forgiven. Interesting -- 11% of the expense cash can leverage growth whereas the other 89% of the expense cash, not to mention 100%, can't leverage any growth at all. The commonweal argument -- everyone pays taxes for a common good -- makes a lot of sense when the participants are too tiny to leverage their ca***o accomplish large goals. Public schools, public highways, a standing army, etc., are everyday examples of my little cash being combined with everyone else's little ca***o leverage big goals. But now we only have seven Class I railroads. Where's the leverage to come from? And what about the take rate of the bureaucracy? Even if it's only 10% -- the usual overhead amount I used to figure in construction estimating -- that's 10% that won't be spent on anything other than white-collar welfare. I doubt the railroad's bureaucracy will be able to come down by an equivalent amount -- but I think of reasons it would go up: for one, to administer my gin-and-tonic slush fund. Or, is the plan to make up the cost of the overhead out of the general tax fund? Or, is it to achieve leverage by a withdrawal from the general fund that will be put in on top of the railroad fund? If I'm a railroad investor or manager, I could vote for that, if we're talking big money. Hello, subsidy. That's the only thing I can fathom that would accomplish a net positive result, at least for my railroad. Actually, there is a case for a tax for a common goal, and the railroads already do it. It's the terminal improvement project, which has been done since at least the 1920s in Chicago and myriad other cities, and recently in Los Angeles, Kansas City, and now Chicago. It's a way of resolving competitive differences among railroads in a geographic location where costs and benefits are difficult to apportion. This tax is created and spent on a case-by-case basis with limits of space and time. It's not a broad, "let's create a bureaucracy because we're smarter than them tax." Maybe the bureaucracy is smarter. It certainly will be more sensitive to politics. I guess I'd like to see (1) where the railroad money is misspent at present that can be reallocated to a tax and spent wisely in the future, (2) how the overhead is going to be made up, (3) how the government is going to create a system that isn't subject to political abuse, and (4) how the government is going to know more of the railroad business than the railroads. I could be wrong about all this, but like I said, I get easily lost in numbers.
QUOTE: Originally posted by futuremodal QUOTE: Originally posted by Limitedclear Dave- Its a good thing that we still have that pesky Constitution that makes what you are suggesting not only illegal but unconstitutional. What you suggest is confiscatory in more than one way and I hate to break it to you, but when you want to tax someone and/or force them to spend capital in a particular way at best that is reregulation and at worst outright confiscation. We live in a free enterprise system, where do you live? LC LC, Let me see if I've got this straight. It's perfectly okay for the railroads to beg the federal government for financial aid to pay for infrastructure improvements (presumably out of the general fund or worse yet, the ultimate hypocrasy, taking this rail infrastructure improvement money out of the highway trust fund), but if the feds tax the railroads' fuel use to make this payment, somehow that is illegal and unconstitutional?! Hmmmm.... If it was legal and constitutional to tax the railroads 4.3 cents per gallon for federal deficit reduction, why then would it be illegal and unconstitutional to tax them in the same vein for rail infrastructure improvements, aid by the way that is being lobbied for by the railroads? You'll have to explain this dichotomy.
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