Rail News

US: ASLRRA Report Stresses Importance of Short-Line Tax Credit

Washington, D.C.: The American Short Line and Regional Railroad Association (ASLRRA) has published an Economic Impact Report which demonstrates the positive contribution of the short-line rail industry to the US economy and the importance of the Short-Line Tax Credit (45G) for stimulating investment in it.

The report, which was prepared for ASLRRA by PricewaterhouseCoopers LLP (PwC), highlights several statistics which underline the importance of short lines. These operators directly employ 17,100 people across the US and the report estimates that approximately 43,970 jobs at suppliers, contractors and other companies are supported by the short-line rail industry.

The report notes that in 2016 478,820 jobs were provided by industries reliant on short-line services. These industries also generated $26.1 billion of labour income and added $56.2 billion to the U.S. economy. Of these industries, manufacturing, agriculture and mining are particularly dependent on short lines to support their operations.

Related Post:  EU Ministers Adopt Graz Declaration: A Green Deal for Europe
Short-Line,: Copper Basin Railway
Copper Basin Railway, Arizona, © Clay Gilliland (under licence)

The Short-Line Tax Credit (45G)

The report also illustrates the importance of the short-line tax credit for stimulating investment in the industry’s infrastructure. The analysis notes that according to the Federal Railroad Administration derailments on these lines have decreased by 50% since the Short-Line Tax Credit was introduced by Congress in 2004. The credit reduces the cost of capital expenditure for short-line companies by approximately 63% and incentivises investment in infrastructure to support operations on short lines. The ASLRRA, in partnership with other trade organisations in the US rail industry, has long argued that an extension of the credit is necessary to maintain the standards of safety and performance facilitated by these investments.

The Railway Tie Association (RTA) estimates that since the introduction of the credit short lines have purchased $50 million worth of wooden railway ties (sleepers), which it believes exceeds the number of ties purchased without the credit by one million units.

Related Post:  CP Hosts Reconnect 2018 Short Line and Regional Railroad Conference

Judy Petry, Chair of ASLRRA and President and CEO of Farmrail, Inc., said:

“The report definitively shows what the industry has long known. Short lines are a critical piece of the U.S. transportation network, and in fact the entire U.S. economy.
“Moreover, the report clearly shows the tremendous and far reaching impact on our ability to provide value to our customers and the economy of the ‘45G’ short line tax credit. Our very future hangs in the balance as the credit has expired in December of 2017. The time is now to make the Short Line Tax Credit permanent.”

Jerry Vest, Chairman of ASLRRA’s Legislative Policy Committee and Senior Vice President, Government & Industry Affairs, Genesee & Wyoming Railroad Services, Inc., said:

“The Short Line Tax Credit is shown to be smart public policy, improving safety and efficiency for our customers and our businesses. It is a proven solution, and we urge Congress to take action now to extend the Short Line Tax Credit. It will allow smaller railroads to continue to improve their safety performance, better serve their customers, and remain a catalyst for economic growth in areas of the country that would otherwise not have connectivity to the national rail network.”

The report argues that by reducing the cost of capital expenditure by 63% the Short-Line Tax Credit stimulates a 47.3% increase in investment. This compares very favourably to the 1.2% decrease in the cost of capital investment facilitated by reductions in the corporate tax rate, which only incentivises a 0.9% increase in investment.

Related Post:  UK: Priti Patel MP Joins Rail Fellowship Programme

Since its introduction in 2004 Congress has approved several extensions of the tax credit, but the ASLRRA, the RTA and other trade organisations are campaigning for it to be made a permanent measure.

News categories

10 Dec 2018
10 Must-Read Rail News Stories for Week 49
19 Sep 2018
US: FRA Publishes Funding Opportunities for Positive Train Control
03 Sep 2018
Kansas City Southern CFO to Address Investment Conferences in September
31 Aug 2018
Union Pacific Making “Good Progress” on Positive Train Control
27 Aug 2018
US: Federal Railroad Administration Reveals Recipients of PTC Funding
26 Jul 2018
REMSA: Jacob Carter Appointed Government Affairs Manager
21 Jul 2018
Freight Operator Union Pacific Record Second Quarter Income
22 Jun 2018
US: Kansas City Southern Orders 50 Locomotives from GE Transportation
Subscribe to Railway-News
Get the latest contract alerts and Railway News emailed directly to your inbox.

We respect your privacy and take protecting it seriously.

Please tick to confirm you would like to receive emails we think may be of interest to you. We sometimes tailor the content you see to what we think you'll find interesting, and so monitor your interaction with our website and email content (find out more).