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<p>[quote user="oltmannd"]</p> <p> </p> <blockquote> <div><img src="/TRCCS/Themes/trc/images/icon-quote.gif" /> <strong>Sam1:</strong></div> <div> I don't know the fuel tax for the freight railroads.   <p> </p> <div style="clear:both;"></div> <p> </p> </div> </blockquote> <p>There is no federal fuel tax on off-road diesel, but states have varying approaches. [/quote]</p> <p>You are correct.  The railroads do not pay fuel taxes on the diesel that is burned in their locomotives.  Nor would they pay federal fuel taxes for other vehicles that are used exclusively off-road.  However, I believe that they pay federal fuel taxes for on-road vehicles.</p> <p>The country's freight railroads have a hefty federal and state income tax bill.  Most of the income taxes flow to the federal government; however, a portion goes to state governments.  In 2010 the combined federal tax bill for the freight railroads was approximately $4.5 billion.  The bill for the NS was $871 million.  In part this is how the railroads pay back any loans and grants that they receive from the federal  and state governments.  Whether the taxes paid by the railroads are sufficient to cover federal and state aided construction projects depends on current and future earnings.</p> <p>Avoided costs, i.e. avoidance of highway construction, etc. is a tricky exercise.  It requires a variety of statistical and financial estimates.  Get one of them seriously wrong and the estimation model can come unraveled.  The CBO does it all the time.  If I had a $1,000 for every electricity utility avoided cost model that did not pan out, I would have a tidy sum.</p>
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