Investments in freight rail boost the nation’s economy. In fact, based on U.S. Department of Commerce data, every $1 of rail infrastructure investment that expands rail capacity generates more than $3 in total economic output.
Although many people do not realize it, America’s freight railroads operate almost entirely on infrastructure they build and pay for themselves. This means that private investments by freight railroads provide huge benefits for all Americans at no cost to the taxpayer. When you consider that railroads have invested more than $480 billion since 1980 to revitalize rail infrastructure and equipment – more than 40 cents out of every dollar they earned – it is easy to see that the benefits of rail investment have been substantial indeed.
Railroads are continuing to invest heavily in maintaining and expanding the rail network. However, with huge growth projected in demand for freight transportation, even these record levels of investment by the railroads may not be enough.
A recent study found that while the railroads would be able to invest enough to meet most of this demand themselves, more must be done. While the recent economic downturn may delay projected growth by a few years, the issue must be addressed now if we are to have the rail capacity we need to move the nation forward.
One proposal that could help right away would provide tax incentives for even greater investment in rail that expands the capacity of the rail network to carry even more of the burden. The benefits to taxpayers, businesses, and consumers in terms of economic growth, fuel efficiency, emissions reductions, and highway congestion relief, would far outweigh the costs.