Subsidy = 1. a direct pecuniary aid furnished by a government to a private industrial undertaking, a charity organization, or the like. 2. agrant of money, especially governmental, to aid private undertakings. A subsidy is usually given to promote commercial enterprise: "a subsidy to manufacturers during a war. " I fail to see who is being subsidized in the case of Acela. On operating expenses, it pays its own way. Rather better than the billions in subsidies paid to the oil companies every year through tax credits.
So, I guess for sam1, words are what sam says they mean.
C&NW, CA&E, MILW, CGW and IC fan
I think, Schlimm, that is is paying is own way of equipment, power (electricity), crew, etc. and then a little bit more. The subsidy in this case would come in that Acela does not own its own track but Amtrak and MNRR do (CTDOT). So because of its earnings Acela is a stellar performer by bringing home its costs and then some. And while we are dazzled by its performance, the question remains is it worth the investment to build a railroad just to run Acela? Therein begins the arguements.
RIDEWITHMEHENRY is the name for our almost monthly day of riding trains and transit in either the NYCity or Philadelphia areas including all commuter lines, Amtrak, subways, light rail and trolleys, bus and ferries when warranted. No fees, just let us know you want to join the ride and pay your fares. Ask to be on our email list or find us on FB as RIDEWITHMEHENRY (all caps) to get descriptions of each outing.
Is it "worth the investment to build a railroad just to run Acela?" I don't think that is the best question. The NEC (like most other rail line are, and should be) is an integrated transportation corridor -- Acela, Regionals, various commuter agencies, and yes, even a little freight. Don't forget, Amtrak's financials show income from rents paid by commuter and freight operators. And, just from a passenger-operations standpoint, I believe that the integrated and inter-related nature of the NEC -- different levels of service, serving different groups of stations -- is exactly what contributes to the Corridor's success (such as it is, reagrdless of exactly how you measure it).
This model (local & regional services feedin high-speed lines) is what is found on successful European and Japanese lines. Some adaptation of such a model (rather than one middle-of-the-night train in each direction) might help save long distance services.
Let the arguments begin?
Dragoman Is it "worth the investment to build a railroad just to run Acela?" I don't think that is the best question.
Is it "worth the investment to build a railroad just to run Acela?" I don't think that is the best question.
But, Dragoma, that is the way HSR is being percieved by many people in this country. It is also the way freight railroads want the public to percieve it. Most don't know a railroad exists unless it is 1) commuter and the or someone they know ride it; 2) there is a grade crossing which is occupied by a train and holds them up on thier journies; 3) they live next to the tracks and the trains keep them awake; 4) they work for a company that ships or receives (or both) product by rail; and 5) they work for a railroad. That probably takes care of less than a third of the population. Mention train and they think of a circle of track around the Christmas tree.
So, Henry, what can we do to educate the rest to the fact -- as I believe you have repeatedly alluded to -- that the only way to actually have successful passenger service is to operate an integrated system that actually provides a service to its actual and potential riders, as opposed to just operating trains along a track?
schlimm Subsidy = 1. a direct pecuniary aid furnished by a government to a private industrial undertaking, a charity organization, or the like. 2. agrant of money, especially governmental, to aid private undertakings. A subsidy is usually given to promote commercial enterprise: "a subsidy to manufacturers during a war. " I fail to see who is being subsidized in the case of Acela. On operating expenses, it pays its own way. Rather better than the billions in subsidies paid to the oil companies every year through tax credits. So, I guess for sam1, words are what sam says they mean.
In many cases a subsidy is substance over form and does not necessarily confirm to a dictionary definition..
The Acela receives a direct subsidy from the federal government to help cover the cost of the infrastructure that it runs on, the cost of the equipment that it uses, and the capitalized interest embedded in both. And many of the passengers, in effect, are having their premium ride subsidized by their clients, customers, taxpayers, etc.
The oil companies receive no direct subsidies other than tax decuctions that generally are available to all businesses. They are able to take certain credits that are available to all extractive industries, e.g. coal, gas, etc. They also get a credit for the risks associated with drilling in high risk areas, e.g. Gulf of Mexico, Alaska Slope, etc. But subsidies paid to oil companies have nothing to do with whether subsidies should be paid to passenger rail, especially for premium services, and whether using premium services via an expense account is a form of indirect subsidy.
Many if not most people don't think of the tax deductions associated with home ownership (mortgage interest, property taxes, exclusion from taxation of most of the capital gain on sale, etc.) as a subsidy. But economists and accountants have known for years that they are subsidies, even though they don't a traditional dictionary definition of a subsidy.
[quote user="dakotafred"]
Sam1 seems to be arguing a matter of abstract principle rather than meaningful dollars and cents, and I am puzzled as to why unless it's from enjoyment of argumentation for its own sake. It can't be from class envy or resentment, because sam1 has regaled us with plenty of tales of his own first-class travels. /quote]
There is nothing abstract about Amtrak's subsidies, which in 2010 were approximately $3.6 billion, and were intended to cover operating losses as well as make capital improvements. In the scheme of things, i.e. the federal deficit, it is a relatively small amount of money, but I have long believed that one cannot put out a fire (national deficit and debt) by pouring just a little more gasoline on it.
I would like to see all transport subsidies go away. Although there is a role for government in jump starting national transport infrastructure, the users should pay for it, as well as any operating and maintenance costs. If they will not do so, the transport mode, especially commercial modes, should be allowed to whither away.
Since you know nothing about my income, class, etc., your comments are out of place and have nothing to do with the subject. If you think that the Acela service does not receive a subsidy from the federal government or people who use any premium service, irrespective of the carrier, and are paying for it with an expense account, are not passing it on to others, thereby enjoying the ride on someone else, make a case for your view with logic and facts. But stop throwing barbs that have nothing to do with the discussion. Forums are for airing differing points of view. They are not for rants agains the participants.
Sam1: you say "I would like to see all transport subsidies go away. That is to say, although there is a role for government in sponsoring transport infrastructure, the users should pay for it, as will as any operating and maintenance costs. If they cannot do so they should be allowed to die."
So, no General Fund revenus to the Highway Fund, nor to the air traffic control system, nor for TSA, nor for airports generally. In fact, all of DOT should only be funded by various user fees?
Dragoman Sam1: you say "I would like to see all transport subsidies go away. That is to say, although there is a role for government in sponsoring transport infrastructure, the users should pay for it, as will as any operating and maintenance costs. If they cannot do so they should be allowed to die." So, no General Fund revenus to the Highway Fund, nor to the air traffic control system, nor for TSA, nor for airports generally. In fact, all of DOT should only be funded by various user fees?
Why not? My wife and I were talking about Federal funding etc, this morning. Billions and Billions and Billions for the war efforts but cut millions and a hundred thousand here and there for other projects like passenger rail services. If the anti rail group is so bent on private enterprise with no subsidy, then why don't they propose the oil companies and insurance companies (auto insurance) and auto manufacturers be required to build and maintain streets and highways? Doesn't make sense, can't be done. We must get over the idea that socialism is so bad because progress can only be achieved by a consortium of government and private enterprise, a proven formula in the United States since 1776!
On another note: Acela's financial success is, in effect, subsidizing the Northeast Corridor.
Historically, the government has played an important role in facilitating the development of the nation's transport infrastructure. Its involvement was predicated on the basis that the users would ultimately pay for the use of the infrastructure. For the most part, that has been true, although the payment streams have not always been transparent, e.g. property taxes are used to pay for city streets and county roads, monies are transferred from the general fund to the highway trust fund (a relatively recent development), etc.
Government facilitation of the development of transport infrastructure is appropriate, in my mind, as long as their is a reasonable probability that the taxpayers will get their money back. This has been largely true in most instances, although there are minor exceptions. Without government involvement, it is problematic whether private enterprise would have the capital to build it, although most of the electric grid in the United States was built by investor owned utilities.
The user should see the true cost of transport and should pay the fully allocated cost to use it, unless the transport is dubbed a utility, e.g. local transit systems, para-mobility vans, etc. When subsidies enter the picture, the user does not understand the true cost. Therefore, he is likely to chose a mode of transport that may not be the optimum solution for him and society.
Case in point. Americans drive personal vehicles that get about half the average mileage of personal vehicles in Europe, Australia, New Zealand, etc. They do so because the full cost of driving does not show up at the pump. So they don't see the consequence of their behavior and most psychologists agree that behavior is a function of its consequences.
Ultimately, all transport should be funded throuogh user fees paid at the price point, e.g. pump, ticket counter, etc. If society decides that lower economic people should access to any mode of transport, it can supplement their income directly to enable them to rent space on the mode of transport in question. This, by-the-way, is how the electric utility industry functions. If people cannot afford to pay their electric bills, in most states they can get help with them. But the price of electricity at the transfer points, as well as the end user point, reflects its true cost. It works reasonable well and is a good method for rationing electric energy, i.e. getting people to conserve its use.
Sam1 . Without government involvement, it is problematic whether private enterprise would have the capital to build it, although most of the electric grid in the United States was built by investor owned utilities.
. Without government involvement, it is problematic whether private enterprise would have the capital to build it, although most of the electric grid in the United States was built by investor owned utilities.
But Sam how was REA financed? Didn't the utilities later buy in to REAs when they had developed the market?
REA has nothing to do with this argument line. REA was railroads trying to keep a product line they thought they needed at the time and was an inside industry decision. Sam's comment about government involvement being problematic as to whether or not private enterprise would have capital to build it is the crux of it all. Her example of private utilities building the grid does not really apply since most utilities are or were monopolies within their own regions and districts, therefore, at the time, without real competition. The two most blatant examples of government building was The National Road on the Federal level, and the Erie Canal on a state level. Neither would or could have been built by private enterprise but both allowed for greater economic expansion than was otherwise feasible. Likewise, land grants to speculative railroad builders helped open areas to people, agriculture, and industry otherwise not feasible. And all that was back in the 19th Century. Rural power grids did in fact get help from the Federal Government if you look at the Tennessee Valley project come to think of it. If a town didn't pave its streets, build sidewalks and street drainage back 75-150 years ago, they'd never have attracted industry and commerce. Where does subsidy begin and where does it end?
REA on this thread refers to the New Deal's Rural Electrification Administration, which, through loans to local co-ops, allowed America's farmers to get the electricity that private electric utilities refused to provide them because of lack of profitability. In 1934 only 11% of farms had electricity; by 1942 almost 50% did. Another good example of how society can solve some problems that were beyond the reach of capitalism.
henry6 REA has nothing to do with this argument line. REA was railroads trying to keep a product line they thought they needed at the time and was an inside industry decision.
REA has nothing to do with this argument line. REA was railroads trying to keep a product line they thought they needed at the time and was an inside industry decision.
Sorry Henry. I always referred to Railway Express as REX or REAX. Should have clarified REA as the Rural Electrification Agency.
In response to Sam1, I don't think it's at all appropriate to treat the "spread" between Acela fares and regional fares as a "subsidy" because the passengers paying them may pass the costs on to their customers or clients. The same can be said of virtually any expense incurred by a business traveler that's reimbursed by his/her employer. For example, put that "high level manager" paying the Acela fare on an airplane. The air fare will be passsed on to customers or clients the same as the rail fare. Why isn't that a "subsidy" to the air lines? And, based on this theory, why would you distinguish between the regional fare and the Acela fare at all? After all, if the manager uses a slower regional train and pays the lower fare, that fare will similarly be "passed on" to his/her customers or clients. Further, on the corridor, even the regional fares will likely be higher than Megabus. Is that "spread" a "subsidy" too?
And let's not stop with rail fares. How about cost of the nice hotel room and meal the manager had while on his/her trip. Those, too, will be ultimately "passed on" to customers or clients. Are they "subsidies" to the hotel and the restaurant?. Or are they "subsidies" only to the extent that the costs exceed the price of a Motel 6 room and a Big Mac.?
The fare actually paid for the service received by the passenger is not a "subsidy", regardless of whether it is "high" or "low", and regardless of whether it is ultimately passed on to customers, clients or strockholders as part of a business' cost or price structure or the value of its shares. To call user charges like this a "subsidy" would mean all expenses incurred by business people and reimbursed by their employers are "subsidies" to those who provided the goods or services for which they were incurred, In the case of rail fares, that would mean that the only fares that wouldn't be "subsidies" would be the fares paid by non-business travelers.
The Corridor receives subsidies. The Acela runs on the Corridor. The A cela returns its investment and thensome because it is market priced and accepted. The Acela can be said to be subsidizing the Corridor. If those who ride the Acela took another form of transit it would probably be first a subsidized airline at the same or higher market price or by subisdized luxury bus similarly priced but with fewer amenities. The question that comes to mind is how many Acela customers would actually use Regional and how many would seek other means?
schlimm REA on this thread refers to the New Deal's Rural Electrification Administration, which, through loans to local co-ops, allowed America's farmers to get the electricity that private electric utilities refused to provide them because of lack of profitability. In 1934 only 11% of farms had electricity; by 1942 almost 50% did. Another good example of how society can solve some problems that were beyond the reach of capitalism.
The REA helped bring electric power to some rural communities quicker than they would have gotten it had they waited until the investor owned electric utilities provided the power. Most REA utilities, known as co-ops, are located in the mid-west and southeast. They were built with low cost government financing, i.e. tax free bonds. In addition, in most instances, they pay no income taxes, property taxes, etc. Nevertheless, they are expected to recover their costs from their rate payers. Again, the operative words are recover costs from the rate payers or users.
Public electric utilities are the other form of public ownership. These utilities are owned usually by a city or municipality, whereas a co-op is owned by the customers. The largest public owned electric utility in the United States is owned by Los Angeles, followed closely by one owned by San Antonio.
Most of the rural areas in the United States, contrary to popular belief, were wired by investor owned electric utilities and get their power from these utilities. In those states with enlightened regulators the utilities were allowed to charge sufficient revenues in the cities to have the resources to extend the power lines out to the folks on the farm. Texas Power & Light Company, Texas Electric Service Company, West Texas Utilities, Southwest Electric Utilities, El Paso Electric, are examples of investor owned electric utilities that extend service to rural customers.
Approximately 85 per cent of Americans get their juice from investor owned electric utilities. And more than 90 per cent of the power is generated by these utilities. These companies pay income, property, excise and franchise taxes, whereas their public and co-op counterparts pay none of these taxes, although they usually collect a ghost franchise tax.
In Texas, where competition in the electric utility market is robust, the investor owned electric utilities trounce the public utilities. For example, in Georgetown, where I live and where the local utility is owned by the city, the residential rate is 10.56 cents per kWh. In San Antonio, which owns the local electric utility, the residential rate is 11.2 cents per kWh. In Austin, again where the utility is owned by the city, the rate is 8.7 cents per kWh. In Dallas, Houston, El Paso, etc, where competition has been introduced, customers can shop for their electric energy. As a result, they can find rates as low as 8.7 cents per kWh or better from more than 30 retailers. Why is the Austin rate so low? Because the utility is losing money and is on the verge of a significant rate increase.
Another point that is frequently overlooked is that most public utilities, as well as co-ops, depend on investor owned electric utilities for a substantial percentage of their power and transmission capabilities. Austin, for example, buys approximately 35 per cent of its power from investor owned utilities. The same is true for San Antonio. Georgetown depends on Oncor, which is part of Energy Future Holdings, for its transmission ties.
Numerous studies have shown that investor owned electric utilities, especially where competition is permitted, are simply more efficient and effective than public utilities. Government simply does a lousy job of running commercial enterprises.
I don't believe government should run any commercial activity that can be hoisted by competitive businesses in a well regulated market place.
Falcon48 In response to Sam1, I don't think it's at all appropriate to treat the "spread" between Acela fares and regional fares as a "subsidy" because the passengers paying them may pass the costs on to their customers or clients. The same can be said of virtually any expense incurred by a business traveler that's reimbursed by his/her employer. For example, put that "high level manager" paying the Acela fare on an airplane. The air fare will be passsed on to customers or clients the same as the rail fare. Why isn't that a "subsidy" to the air lines? And, based on this theory, why would you distinguish between the regional fare and the Acela fare at all? After all, if the manager uses a slower regional train and pays the lower fare, that fare will similarly be "passed on" to his/her customers or clients. Further, on the corridor, even the regional fares will likely be higher than Megabus. Is that "spread" a "subsidy" too? And let's not stop with rail fares. How about cost of the nice hotel room and meal the manager had while on his/her trip. Those, too, will be ultimately "passed on" to customers or clients. Are they "subsidies" to the hotel and the restaurant?. Or are they "subsidies" only to the extent that the costs exceed the price of a Motel 6 room and a Big Mac.? The fare actually paid for the service received by the passenger is not a "subsidy", regardless of whether it is "high" or "low", and regardless of whether it is ultimately passed on to customers, clients or strockholders as part of a business' cost or price structure or the value of its shares. To call user charges like this a "subsidy" would mean all expenses incurred by business people and reimbursed by their employers are "subsidies" to those who provided the goods or services for which they were incurred, In the case of rail fares, that would mean that the only fares that wouldn't be "subsidies" would be the fares paid by non-business travelers.
The issue is whether the premium fare that is paid by someone traveling on an expense account is a subsidy to the carrier or vendor. As I noted, it applies equally to any mode of transport, including first class, business class, etc.
Are high priced meals eaten by people on an expense account a subsidy for the restaurants that serve them. The IRS thinks so. It is the reason a business cannot deduct more than half of the cost of the meal as a legitimate business expense. And there is an upper limit on the cost of the meal. It is the reason why all outside of the box travel, meal, and entertainment expenses are constrained by the tax code.
The Acela service probably would not be possible without people riding on expense accounts. On the other hand, if the first class and business cabins on the jet liner went away, the airlines would probably do quite nicely, since there would still be plenty of people to fill the seats in the back. Come to think of it, on Southwest, Jet Blue, etc., there is no first and business classes. And they appear to be doing OK.
Clearly, what is a subsidy depends on one's views. As I mentioned, most people really get torqued up when I tell them that the ability to deduct the mortgage interest, property taxes, and capital gains on their homestead on Schedule A and D is really a subsidy. I guess it depends on whose Ox is being gored.
I have another question based on marketing. Could the speed of Acela be marekted without the other amenities and higher fares? In other words, it it were a regular coach seat with regular long distance meal service, and were priced at regular coach fares, would there be enough demand/use to do better than break even? Supose the marketing plan was not against the Eastern Shuttle but rather against Greyhound or the family Toyota, could it succeed?
Sam1 ". The issue is whether the premium fare that is paid by someone traveling on an expense account is a subsidy to the carrier or vendor. As I noted, it applies equally to any mode of transport, including first class, business class, etc. Are high priced meals eaten by people on an expense account a subsidy for the restaurants that serve them. The IRS thinks so. It is the reason a business cannot deduct more than half of the cost of the meal as a legitimate business expense. And there is an upper limit on the cost of the meal. It is the reason why all outside of the box travel, meal, and entertainment expenses are constrained by the tax code. The Acela service probably would not be possible without people riding on expense accounts. On the other hand, if the first class and business cabins on the jet liner went away, the airlines would probably do quite nicely, since there would still be plenty of people to fill the seats in the back. Come to think of it, on Southwest, Jet Blue, etc., there is no first and business classes. And they appear to be doing OK. Clearly, what is a subsidy depends on one's views. As I mentioned, most people really get torqued up when I tell them that the ability to deduct the mortgage interest, property taxes, and capital gains on their homestead on Schedule A and D is really a subsidy. I guess it depends on whose Ox is being gored.
".
You are confusing two entirely different issues
The question of whether a user fee a business traveller pays to the provider of a service (whether rail transportation or hotel accomodations) is tax deductible has NOTHING whatever to do with the issue of whether the fee is a "subsidy" to the service PROVIDER. The reason IRS does not allow some types or amounts of business expenses to be deducted isn't because IRS considers them to be "subsidies" to the PROVIDERS of the goods or services involved. It's because IRS does not consider the expenses to be reasonably necessary for the TAXPAYER (that is, the business which INCURRED the expense) to generate its own income, and thus does not allow the TAXPAYER to use the expenses to reduce its taxes.
The other types of tax deductions you mention (mortgage, property taxes, etc) also have NOTHING to do with this question. One can legitimately argue whether giving these deductions to a taxpayer is a form of "subsidy". But, if it is a "subsidy", it is a subsidy to the TAXPAYER which incurred the expenses. It is not a "subsidy" to the entity which sold the taxpayer a mortagage, or the local govenrment which levied the property tax. It's also not a "subsidy" to other providers of goods and services, who may make some additional sales because the deductions give the taxpayer more disposible income. If you start looking at the downstream multiplier effects of every government policy which may influence a buyer's economic decision to purchase a product or service, and label them all as "subsidies" to the product or service providers, then you might as well call everything a "subsidy" and forget about the question.
Finally, if you are going to use tax deductibility as the criteria for "what is a subsidy", then Acela fares flunk your own test. To my knowledge, Acela fares for business travel are fully deductible.
Falcon48 Sam1: ". The issue is whether the premium fare that is paid by someone traveling on an expense account is a subsidy to the carrier or vendor. As I noted, it applies equally to any mode of transport, including first class, business class, etc. Are high priced meals eaten by people on an expense account a subsidy for the restaurants that serve them. The IRS thinks so. It is the reason a business cannot deduct more than half of the cost of the meal as a legitimate business expense. And there is an upper limit on the cost of the meal. It is the reason why all outside of the box travel, meal, and entertainment expenses are constrained by the tax code. The Acela service probably would not be possible without people riding on expense accounts. On the other hand, if the first class and business cabins on the jet liner went away, the airlines would probably do quite nicely, since there would still be plenty of people to fill the seats in the back. Come to think of it, on Southwest, Jet Blue, etc., there is no first and business classes. And they appear to be doing OK. Clearly, what is a subsidy depends on one's views. As I mentioned, most people really get torqued up when I tell them that the ability to deduct the mortgage interest, property taxes, and capital gains on their homestead on Schedule A and D is really a subsidy. I guess it depends on whose Ox is being gored. You are confusing two entirely different issues The question of whether a user fee a business traveller pays to the provider of a service (whether rail transportation or hotel accomodations) is tax deductible has NOTHING whatever to do with the issue of whether the fee is a "subsidy" to the service PROVIDER. The reason IRS does not allow some types or amounts of business expenses to be deducted isn't because IRS considers them to be "subsidies" to the PROVIDERS of the goods or services involved. It's because IRS does not consider the expenses to be reasonably necessary for the TAXPAYER (that is, the business which INCURRED the expense) to generate its own income, and thus does not allow the TAXPAYER to use the expenses to reduce its taxes. The other types of tax deductions you mention (mortgage, property taxes, etc) also have NOTHING to do with this question. One can legitimately argue whether giving these deductions to a taxpayer is a form of "subsidy". But, if it is a "subsidy", it is a subsidy to the TAXPAYER which incurred the expenses. It is not a "subsidy" to the entity which sold the taxpayer a mortagage, or the local govenrment which levied the property tax. It's also not a "subsidy" to other providers of goods and services, who may make some additional sales because the deductions give the taxpayer more disposible income. If you start looking at the downstream multiplier effects of every government policy which may influence a buyer's economic decision to purchase a product or service, and label them all as "subsidies" to the product or service providers, then you might as well call everything a "subsidy" and forget about the question. Finally, if you are going to use tax deductibility as the criteria for "what is a subsidy", then Acela fares flunk your own test. To my knowledge, Acela fares for business travel are fully deductible.
Sam1: ". The issue is whether the premium fare that is paid by someone traveling on an expense account is a subsidy to the carrier or vendor. As I noted, it applies equally to any mode of transport, including first class, business class, etc. Are high priced meals eaten by people on an expense account a subsidy for the restaurants that serve them. The IRS thinks so. It is the reason a business cannot deduct more than half of the cost of the meal as a legitimate business expense. And there is an upper limit on the cost of the meal. It is the reason why all outside of the box travel, meal, and entertainment expenses are constrained by the tax code. The Acela service probably would not be possible without people riding on expense accounts. On the other hand, if the first class and business cabins on the jet liner went away, the airlines would probably do quite nicely, since there would still be plenty of people to fill the seats in the back. Come to think of it, on Southwest, Jet Blue, etc., there is no first and business classes. And they appear to be doing OK. Clearly, what is a subsidy depends on one's views. As I mentioned, most people really get torqued up when I tell them that the ability to deduct the mortgage interest, property taxes, and capital gains on their homestead on Schedule A and D is really a subsidy. I guess it depends on whose Ox is being gored.
Its a subsidy to the user in some instances. And it is a subsidy for the service provider in that the service would not otherwise be sustainable.
The tax code is a political document. It enhances or restricts certain activities. The word subsidy does not appear in the code. It is a matter of substance over form. But when deductions are restricted, it is because politician have concluded that they are unfair and serve no societal purpose. Call them what you want, the ability to deduct premium transport fares, such as those charged by the Acela services, benefits the rider, who for the most part is passing the cost through to the end users, and it benefits Amtrak. If people don't like the term subsidy, try enabler.
The tax benefits for home ownership in the U.S. benefit the owners. They also benefit builders and sellers in that they can build bigger, pricier houses, which tend to be more profitable than smaller, less featured houses. I used this illustration because it is an analogy that most people can relate to. It is also one that causes most people to get torqued up because it hits home. One man's subsidy is another man's vital investment.
Being allowed to deduct the cost of an Acela fare (I never claimed otherwise) for expense account riders enables Amtrak to offer a premium service that otherwise it could not do. True, the rider benefits, but so too does Amtrak. In my mind it is a form of subsidy, although different in form than the direct subsidy Amtrak receives from the government.
I am not arguing that ordinary and necessary expenses are not a legitimate business deduction. Tthis is the guiding principle of the IRS Tax Code. But if expenses are above and beyond ordinary and necessary, they are not deductable. Business class is deductable because it is classified as ordinary and necessary, although like many things in the tax code, I believe that is a stretch.
Using all capital letters or bold letters in emails, forums, etc. is considered to be shouting. There are several guides for on-line etiquette that deal with the issue in great length.
Sam1 Roads do not pay for themselves. The users pay for them through fuel taxes, excise taxes, sales taxes, fees, and property taxes. Unfortunately, because of the deceptive way the revenues are collected, most motorists don't see the full cost of building and maintaining the country's roads at the pump. But they pay for them.
Roads do not pay for themselves. The users pay for them through fuel taxes, excise taxes, sales taxes, fees, and property taxes. Unfortunately, because of the deceptive way the revenues are collected, most motorists don't see the full cost of building and maintaining the country's roads at the pump. But they pay for them.
Excuse me, but is not using property taxes to pay for roads an outright subsidy? Many take advantage of the subsidy to drive to work. That subsidy has become so widely accepted that very few recognize it for what it is. The deception has worked, and those who might prefer their property tax to used for better (or any) public transportation service are mocked. The money goes to add lanes or build a new interchange instead.
Very little if any fuel taxes filter back to help maintain local roads. And the sales taxes on vehicle purchases and maintenance won't add up to very much either. Using sales tax on my shoes to repave the local main street is subsidizing a competing mode of transportation.
John
cx500 Sam1: Roads do not pay for themselves. The users pay for them through fuel taxes, excise taxes, sales taxes, fees, and property taxes. Unfortunately, because of the deceptive way the revenues are collected, most motorists don't see the full cost of building and maintaining the country's roads at the pump. But they pay for them. Excuse me, but is not using property taxes to pay for roads an outright subsidy? Many take advantage of the subsidy to drive to work. That subsidy has become so widely accepted that very few recognize it for what it is. The deception has worked, and those who might prefer their property tax to used for better (or any) public transportation service are mocked. The money goes to add lanes or build a new interchange instead. Very little if any fuel taxes filter back to help maintain local roads. And the sales taxes on vehicle purchases and maintenance won't add up to very much either. Using sales tax on my shoes to repave the local main street is subsidizing a competing mode of transportation. John
Sam1: Roads do not pay for themselves. The users pay for them through fuel taxes, excise taxes, sales taxes, fees, and property taxes. Unfortunately, because of the deceptive way the revenues are collected, most motorists don't see the full cost of building and maintaining the country's roads at the pump. But they pay for them.
Who pays the property taxes? In the United States the nearly 114 million licensed drivers pay them irrespective of whether they own property or rent. The only motorists who do not pay property taxes, a portion of which are used to build and maintain local streets and county roads, are those who live in public housing. And not many motorists in Texas reside in public housing, although there are some.
The problem with funding local streets and county roads through the property tax, as I have said, is it hides the true cost of driving. For this reason, I would like to see the politicians pass the cost of local streets and county roads through to motorists at the pump, with a corresponding reduction in property taxes. It is not likely to happen.
In Texas' major cities, the legislature has authorized the collection of a dedicated sales tax to fund public transit. These taxes are collected from everyone, most of whom drive and very few who use public transit. In addition, two cents of the of the federal fuel tax is transferred to the Mass Transit Administration, which flows the funds to a variety of mass or public transit projects around the nation. In this manner, motorists are subsidizing public transit and not the other way around.
It's not issues being confused but words being construed and misconstrued. Subisdy is a direct payment from one entity to another not to purchase but to support. A tax is a charge usually from a government or its agent to a private individual or corporation to raise money. There is where the deliniation is. The government can take the tax monies received and pay its bills or give it as a subsidy to a given entity in the form of contsturction, tax break, land, bonds, dollars or any other way. The quibbling here over minutia and rhetoric is distracting from the original postulations. Stop mincing, misusing, and redefining words.
henry6 It's not issues being confused but words being construed and misconstrued. Subisdy is a direct payment from one entity to another not to purchase but to support. A tax is a charge usually from a government or its agent to a private individual or corporation to raise money. There is where the deliniation is. The government can take the tax monies received and pay its bills or give it as a subsidy to a given entity in the form of contsturction, tax break, land, bonds, dollars or any other way. The quibbling here over minutia and rhetoric is distracting from the original postulations. Stop mincing, misusing, and redefining words.
It is in the eyes of the beholder. Humans have been word smithing since they learned to speak. And they will do so until the end of time. Really, Henry, if everyone agreed on a subject or the words associated with it, without a bit a hair splitting, would these forums be any fun?
But I though that's why we had in lawys, spouses and children...especially teenagers!
Sam1 In Texas' major cities, the legislature has authorized the collection of a dedicated sales tax to fund public transit. These taxes are collected from everyone, most of whom drive and very few who use public transit. In addition, two cents of the of the federal fuel tax is transferred to the Mass Transit Administration, which flows the funds to a variety of mass or public transit projects around the nation. In this manner, motorists are subsidizing public transit and not the other way around.
Let's look at this issue from another perspective. How much would it be worth to a typical person driving into work to have his commute 20 minutes faster each way, say 40 minutes instead of an hour, twice a day. This can be accomplished by either:
1) building extra lanes and roads to reduce the congestion; or
2) removing enough automobiles that the congestion is greatly reduced.
The free market would say to go with the cheaper option, which in some cases may be attractive public transit. Note that the remaining motorists are primary beneficiaries, so it is quite appropriate that they share in the costs of that benefit.
Now I will admit rural drivers will see little or no benefit since they don't have traffic congestion problems (except when they drive into the big city to shop, visit or whatever). On the other hand, their local highways have probably been subsidized to a considerable extent by the urban taxpayers.
There are other ways of reducing the automobile use besides public transportation. Working from home (telecommuting) will be challenged to happen in large enough numbers to have real effect. Enforced car-pooling may be resisted, but perhaps the next spike in gas prices will encourage voluntary arrangements.
I think we are in general agreement that one of the problems is the true costs of road transportation are hidden from view, and for most people,<out of sight> equals <out of mind>.
We pay taxes of all kinds and never really get a "direct benefit". I pay school taxes though me, my wife, and son have long since graduated out of the system and my son, his wife and grandchildren live in another state. Other taxes go for state highways not just outside my door, but hundreds of miles in many directions away from where I sit. There is an old saying about if your in for a nickle, your in for a dime. So, if you are a citizen of a town, county, state, for country, you are a citizen or your not.
I kinda don't buy the argument anymore about the true costs of road transportation being hidden from view and hence we are pouring gobnormous amounts of government money into highways and that if trains and transit somewho had their fair share of all of this that we would have this world-class train system.
Yeah, yeah, the cost-comparisons of the anti-train contingent are conducted through the lens of a general point of view on the subject, but the cost figures of the train contingent, in attributing every possible and imaginable indirect cost to road transport are equally suspect.
For example, Madison Metro (local bus company) has a big fat sign on the buses saying that the cost of auto commuting is $9000/year and the cost of Madison Metro, based on a certain multi-ride fare plan, is something like $600/year.
You can easily spend $9000/year if you lease, insure, put gas in, and park a late model car. But to ascribe that entire expense to commuting? When the average trip length on Metro is about 3-4 miles? If you are travelling 3-4 miles each day to work, and that is the only thing you use the car for, you can drive some clunker and find a local mechanic who can keep that puppy running. You know, kind of like a train station car that people keep who have to drive to a suburban station and then take the Metra train into downtown Chicago. This $9000/year comparison may make a point, and it is easy to spend that much on a not-even-that-fancy car if you are buying new and leasing, but it is a bit of a stretch and an exageration in the context of the bus company being your second car.
Whether building a train line is cheaper than adding highway lanes also depends. With the exception of the NEC and maybe the Pacific Surfliner, the corridor trains services cost much, much less than highway lanes but they serve much, much less than the capacity of even one highway lane in each direction.
As to the gas tax as a user fee and the cross-subsidization that goes on, yeah, yeah, the rural roads are cross subsidized, and the Interstate is cross subsidized. If the Interstate were not cross subsidized, it would have to charge substantial, tolls! Like the Illinois, Indiana, Ohio, Pennsylvania, New York, New Jersey, and now Florida and Texas toll roads.
So the argument is let's build a nationwide network of HSR corridors. Let's call it Interstate II or the Steel Interstate or some such thing. Why not have gas tax pay for it just as gas tax pays for Interstate I?
I mean why not? Why don't we just levy another gas tax increment, pay for and build HSR, and instead of driving door-to-door, you would (I guess) drive (and park) at the HSR station, be whisked along on the HSR, and then get a ride (or rent a car) at the other end. We do that with airplanes, don't we?
For one thing, it depends on what the non-railfan non-passenger advocate people out there want to do. If you would rather your gas tax money go towards a multi-modal auto-HSR-somethingattheotherend mode instead of door-to-door auto, I guess that is a choice we have to make through a political process. But we would need to persuade people other than passenger advocates and railfans that trains are kewl. And we shouldn't get mad at people if that is not what they want to do. I think we should advocate and persuade and not scold -- that bus banner borders on a scold, as much as saying look dummy, how much money is flying out the window because you want to drive as if you couldn't budget your auto expenses and whether you could afford a car against whether you want to travel to work on a bus in close fellowship with your fellow Madisonians.
If GM "killed the electric car", what am I doing standing next to an EV-1, a half a block from the WSOR tracks?
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