Citizens for Rail Safety, Inc., retained Anderson Economic Group to prepare an economic analysis of the Freight Rail Infrastructure Capacity Expansion Act (FRICEA). FRICEA would create a tax credit for certain freight rail infrastructure and equipment.
In order to estimate the impact of FRICEA, our project team compared the tax environment the rail industry would face under this law to that faced by the trucking and marine shipping industries. We then analyzed the incentives the rail industry would face under this law to purchase capacity- and safety-enhancing capital, and identified the likely effect of the law on shipping costs in the rail, trucking, and marine shipping industries.
The analysis found that FRICEA unnecessarily encourages investment that would likely have happened without incentives, promotes investments that may come at the expense of safety-enhancements that do not qualify for financial incentives under FRICEA, and allows inefficient tax-avoidance behavior. However, it also finds that under certain conditions, FRICEA may promote the enhancement of rail safety as well. AEG’s conclusions were presented to CRS in the form of a 32-page report.