You don’t need to follow the news too closely to understand why most think that Congress doesn’t get a lot done. But we do see something that appears to have bi-partisan support and which would be a benefit to railcar owners and to the industry that serves them. I’m speaking specifically about the Freight Rail Assistance and Investment to Launch Coronavirus-era Activity and Recovery (Freight RAILCAR) Act, introduced by Illinois Congressmen Darin LaHood (R-IL) and Brad Schneider (D-IL), members of the House Ways and Means Committee. According to Mr. LaHood,
“The Freight RAILCAR Act would provide a tax credit for railcar leasing and manufacturing companies for the cost of replacing two existing railcars with a new fuel-efficient railcar or for refurbishing an existing railcar. This tax credit expires on December 31, 2024. The bill offers an additional tax credit for capital expenditures that modernize equipment and technology to meet environmental standards. This tax credit would expire on December 31, 2022.”
According to Railway Age, in real-speak, this translates to a proposed “50% tax credit for purchasing railcars with a higher payload (an increase of 8%) and a two-for-one railcar replacement.” “Additionally, the RAILCAR Act would offer a 50% tax credit for the scrapping of older assets.”
It is easy to see advantages this act would have for owners of older cars rated at 263,000 gross weight on the rail, spurring the purchase of 286,000 rated cars (nicely an 8.7% increase). The increased weight rating translates to fewer carloads and overall efficiencies in the rail system. We certainly hope this piece of legislation doesn’t get lost in the turbulence that is Washington; might be good to speak to your representative about this one.
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