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4/7/2011



Rail News: Rail Industry Trends

Short-line tax credit extension measure enters Senate


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On March 29, Sens. John Rockefeller (D-W.Va.) and Mike Crapo (R-Idaho) introduced the Short Line Railroad Rehabilitation and Investment Act of 2011 (S. 672), which would extend the short-line tax credit for six years through Dec. 31, 2017. The bill was referred to the Senate Committee on Finance.

A companion bill to H.R. 721, which was introduced in the House Feb. 15 by Rep. Lynn Jenkins (R-Kan.), S. 672 also would make qualified infrastructure expenditures by short lines created after 2005 and before 2011’s end eligible for the Section 45G tax credit. S. 672 and H.R. 721 so far have garnered 16 and 31 co-sponsors, respectively.

“West Virginia is the second biggest producer of railroad ties in this country, and rural communities across the state rely on these short line railroads to maintain business and create jobs,” said Rockefeller in a prepared statement. “This credit has translated directly into jobs, not just for the people of West Virginia but all across America.”

In December, the passage of the Middle Class Tax Relief Act of 2010 extended the short-line tax credit for one year through 2011. Originally enacted in January 2005, the Section 45G provision enables regionals and short lines to claim a tax credit of 50 cents for every dollar spent on infrastructure improvements, up to a cap of $3,500 per mile of owned or leased track.

The tax credit helps fund more than $300 million worth of short-line infrastructure improvements annually, according to American Short Line and Regional Railroad Association estimates.

“Every dollar invested in rail equals three dollars in economic output,” said Rick Webb, chief executive officer of Watco Cos. L.L.C., which owns and operates 22 short lines. “Tax credits are value-added when you consider that everyone in the transportation cycle benefits. New jobs are created to perform the work; shippers receive the best service for their dollar and the public benefits from the efficiencies created by improved infrastructure.”


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