Bill would offer tax credits for freight rail-car investment

(Source: Progressive Railroading 08/25/2020)

The Railway Supply Institute (RSI) has endorsed the proposed Freight RAILCAR Act, a bill introduced in Congress last week that would help generate private investment in freight rail-car manufacturing.

The “Freight Rail Assistance and Investment to Launch Coronavirus-era Activity and Recovery Act” would offer freight rail-car owners a time-limited 50 percent tax credit for purchasing new freight rail cars or refurbishing existing cars that result in improving capacity or fuel by at least 8 percent, RSI officials said in a press release.

In addition, the bill would provide separate tax credits for scrapping rail cars based on their depreciated value and for capital expenditures on equipment or technology enhancements that improve environmental standards or the safety, quality or efficiency of rail-car manufacturing and repair options.

The credit is intended to encourage freight rail-car owners to modernize their fleet to better meet precision scheduled railroading standards, accelerate the industry’s production of new tank cars to meet improved safety standards and to increase the efficiency of the fleet by use of more energy-efficient rail cars, RSI officials said.

The bill was introduced by U.S. Reps. Brad Schneider (D-Ill.), Darin LaHood (D-Ill.), Dan Lipinski (D-Ill.), Rick Crawford (R-Ark.), Earl Blumenauer (D-Ore.) and Drew Ferguson (R-Ga.). 

The legislation comes as demand for new rail cars has reached near-record lows, association officials said. Prior to the COVID-19 pandemic, the freight rail-car manufacturing industry directly supported 65,000 U.S. jobs, with average salaries exceeding the national average by 40 percent.

RSI officials urged Congress to pass the bill quickly to help railway suppliers cope with the economic fallout of the pandemic.

“Railway suppliers are facing increasingly difficult economic circumstances as a result of the COVID-19 pandemic and many have been forced to significantly reduce their manufacturing workforces,” said Nicole Brewin, RSI’s senior vice president of government and public affairs.