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The following appeared as part of an editorial in an
trucking companies that deliver goods pay only a portion of highway maintenance
costs and no property tax on the highways they use, railways spend billions
per year maintaining and upgrading their facilities. The government should
lower the railroad companies’
property taxes, since sending goods by rail is clearly a
more appropriate mode of ground transportation than highway shipping. For one
thing, trains consume only a
third of the fuel a truck would use to carry the same load,
making them a more cost-effective and environmentally sound mode of transport.
Furthermore, since rail lines already exist, increases in rail traffic would
not require building new lines at
the expense of taxpaying citizens.”
how well reasoned... etc.
The conclusion of this editorial is that the
government should lower property taxes for railroad companies. The first reason
given is that railroads spend billions per
year maintaining and upgrading their facilities. The second reason is that
shipping goods by rail is costeffective and
environmentally sound. This argument is unconvincing for several reasons.
First of all,
the argument depends upon a misleading comparison between railroad and truck
company expenditures. Although trucking companies
do not pay property tax on roads they use, they do pay such taxes on the yards,
warehouses and maintenance facilities they own.
And while trucking companies pay only a portion of road maintenance costs, this
is because they are not sole users of public roads.
Railroad companies shoulder
the entire burden of maintenance and taxes
on their own facilities and tracks; but they distribute these costs
to other users through usage fees.
In addition, the author assumes that property
taxes should be structured
to provide incentives for cost-effective
and environmentally beneficial business
practices. This assumption is questionable because property taxes are normally
structured to reflect the value of property.
Moreover, the author seems to think that cost-effectiveness and environmental
soundness are equally relevant to the question of
tax relief. However, these are separate considerations. The environmental
soundness of a practice might be relevant in determining tax
structuring, but society does not compensate a business for its cost-efficiency.
Splitting the issues of cost-efficiency and
environmental impact highlights
an ambiguity in the claim that railway
shipping is more appropriate. On the one
hand, it may be appropriate, or prudent, for me to ship furniture by rail
because it is cost-effective; on the other
hand, it might be appropriate, or socially correct, to encourage more railway
shipping because it is environmentally sound. The argument
thus trades on an equivocation between social correctness on the one hand, and
personal or business prudence on the other.
In sum, this argument is a confusion of weak
comparisons, mixed issues and equivocal claims. I would not accept the
conclusion without first determining: (1)
the factors relevant to tax structure, (2) whether specific tax benefits should accrue
to property as well as to income
and capital gains taxes, (3) whether railway shipping really does provide
greater social benefits, and (4) whether it is correct to motivate
more railway shipping on this basis.