ASLRRA: Fed task force says short-line tax credit worthy of permanence

The 45G short-line tax credit is among two tax credits that have "proven on their merits to receive a permanent extension," the U.S. Senate Finance Committee's Business Cost Recovery Task Force has concluded.

The task force reported more than 40 temporary tax provisions that expired or will expire between Dec. 31, 2017, and Dec. 31, 2019. Among those, the task force evaluated six tax credits, including 45G.

In their introduction to their report, task force co-leads U.S. Sens. Mike Crapo (R-Idaho) and Ben Cardin (D-Md.) stated that 45G was one of two credits that merited a permanent extension — a conclusion that drew praise from the American Short Line and Regional Railroad Association (ASLRRA ).

Created in 2005, the 45G tax credit expired at 2017’s end. The measure allows a credit of 50 cents for each dollar railroads invest in track and bridge improvements, capped at $3,500 per mile. The credit has spurred $4 billion in infrastructure investment since 2005, according to ASLRRA.

"Congress must act now, as continued delays only provide more reticence to invest as businesses await a decision" on the tax credits, said ASLRRA President Chuck Baker in a press release.

Short lines depend on the 45G tax credit to maximize their investment in their infrastructure, he said.

"The residual benefits of dollars spent on railroad infrastructure include employment and growth in the railroad supplier community and in the regional economies as more businesses locate because of rail options," Baker said.

In addition to Crapo and Cardin, the task force included Sens. Todd Young (R-Ind.) and Catherine Cortez Masto (D-Nev.). U.S. Senate Finance Committee Chairman Chuck Grassley (R-Iowa) and Ranking Member Ron Wyden (D-Ore.) served as ex-officio members.

Earlier this year, Grassley and Wyden introduced the Tax Extender and Disaster Relief Act of 2019, which would extend the availability of the 45G tax credit through the end of 2019 and retroactively for 2018.