Smart Ideas: Off the Rails

Plus: The folly of taxing teachers.

AP Photo/Rich Pedroncelli, file
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Feb. 19, 2019, 8 p.m.

Rail projects need private oversight to stay on track

Nick Zaiac, writing for R Street Institute

California’s recently abandoned high-speed rail project demonstrates “the challenges of attempting to manage railroads through politics.” As Californians voiced their opposition to having tracks running through their neighborhoods, the project’s budget ballooned. Generally, when the government tries to build new infrastructure, “bypassed communities are likely to resist any project altogether. In extreme cases, this can mean being forced to select a worse route that adds to costs, as happened in California’s case with its approach to Los Angeles.” Private companies would be more likely to mitigate these costs, as “investors in private lines would punish a company that acts as a poor steward of dollars meant to lay track.”

Stop taxing teachers

Leo Hindery, Jr. and Bob Kerrey, writing for Washington Monthly

Congress can incentivize Americans to become teachers by using the tax code, just as it did “for VISTA and Peace Corps volunteers in the 1960s and ... today for active-duty military personnel.” Closing loopholes that benefit the wealthy and modestly raising the top tax rate would fund such a program. “The $25-plus billion gained each year from restoring fairness to our tax system would more than cover the cost. ... In the aggregate, teachers pay roughly $23 billion in federal taxes per year. On average, that would save each teacher roughly $6,250 per year,” likely driving more qualified individuals to stay in the profession for the long haul.

Rubio right for the wrong reasons on stock buybacks

Michael Strain, writing for Bloomberg Opinion

Sen. Marco Rubio’s legislation to curb stock buybacks “is probably sound” policy, “but his concern about buybacks is off base. “Since 2003, long-term capital gains and qualified dividends have been taxed at the same rate. But current tax law can create a preference for buybacks over dividends for businesses seeking to return money to their shareholders.” It’s reasonable for Rubio to attack the disparity that tax law encourages “one form of distribution over another,” but his reasoning is faulty. He seems to think it is better for businesses to make unnecessary investments than returning money to shareholders; all this does is prevent money from flowing back into the economy.

Sen. Marco Rubio, R-Fla., speaks at the Heritage Foundation in Washington, Monday, Feb. 11, 2019, about the crisis in Venezuela. AP Photo/Carolyn Kaster
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