BRACE Act to make shortline tax credit permanent re-enters Senate

Written by Mischa Wanek-Libman, editor
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Sen. Crapo, fourth from left, during a visit to Watco in the fall of 2016.
Office of Sen. Mike Crapo

Legislation has been introduced into the U.S. Senate that would make permanent a tax credit used to repair and upgrade shortline and regional railroads.

 

Sen. Mike Crapo (R-ID) and Sen. Debbie Stabenow (D-Mich.) introduced the Building Rail Access for Customers and the Economy (BRACE) Act, S.407, on Feb. 16. The bill’s cosponsors include Sens. Richard Blumenthal (D-CT), Bob Casey (D-PA), Jim Inhofe (R-OK), Johnny Isakson (R-GA), Jerry Moran (R-KS), Pat Roberts (R-KS), Chuck Schumer (D-NY), Roger Wicker (R-MS) and Ron Wyden (D-OR).

The shortline railroad track maintenance credit, also known to as the 45G tax credit, provides shortline and regional railroads a 50-cent tax credit for every dollar spent on railroad track maintenance, up to $3,500 per mile of track owned or leased by the railroad.

The BRACE Act’s introduction to the Senate follows a similar effort that began in the U.S. House of Representatives in January when H.R. 721 was introduced by Representatives Lynn Jenkins (R-KS), Earl Blumenauer (D-OR), Rodney Davis (R-IL) and Dan Lipinski (D-IL).

Sen. Crapo referenced the success of the tax credit in helping spur a rail expansion project in Idaho.

“Last fall, I visited with Watco Companies in Burley and Boise and saw, in person, how important shortline railroads are to companies here in Idaho,” added Crapo. “Companies like Watco and its rail partners employ more than 150 Idahoans. Thanks to legislation like the BRACE Act, that number will increase as added shipments are utilized.”

Sen. Stabenow noted the importance of shortline railroads in helping to grow Michigan’s economy.

“I have met with farmers across the state about the problems with our rail system which they rely on to get their products to market,” said Stabenow. “This legislation will help make sure that Michigan has the railroad infrastructure in place to continue to grow our agriculture economy, export more products and create new jobs.”

ASLRRA says the tax credit has enabled shortline railroads to increase their infrastructure investment by 180 percent from its inception in 2004 through 2015. The association notes the capital-intensive nature of the industry and says 45G has been instrumental in allowing shortlines to invest a large percentage of their earnings (24 to 35 percent) in track and bridge rehabilitation.

The tax credit has been active since 2004, going through a series of five short-term extensions-many times being extended retroactively. The most recent extension of the credit expired Dec. 31, 2016. In 2016, the BRACE Act was introduced to make the credit permanent and received a majority of sponsors in both the House and Senate during the 114th Congress.

Sens. Crapo and Stabenow recognize that the uncertainty of periodic extensions causes private investment to decline, limits investments in safety and customer service and provides uncertainty to businesses, farmers and employers that cannot be globally competitive without freight rail.

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