Are railroads taxed on their rails in all parts of US and Canada?

Question

I understand that railroads have to pay taxes on their property or the rails themselves. Is this standard throughout all of North America? I even remember the old Union Carbide plant in Ontario tearing up unused track on THEIR OWN property for tax savings. This seems really weird...and quite anti-railroad. Would a change in tax laws maybe help preserve some of the lesser used branch lines? Once a line is ripped up, it's usually gone forever :-(

Answer 1

Lance, I am unsure about Canadian laws but here in the U.S. I believe property taxes are always higher if you have infrastructure placed on it rather than if nothing at all (for example, if you have personal property and wish to place a building on it, your property taxes increase).  

This is the idea behind "railbanking," taking up the rails for the scrap value and lower taxes (or outright selling the property to another entity, like the state it is located in for trail use) but retaining the right-of-way for possible future rail use (although it rarely happens).

Indeed, though, once a right-of-way is abandoned and railbanked or not, it rarely sees trains again (the Milwaukee Road's Pacific Extension is a good example of this with a key main line).  Common back in the 1970s and 1980s to rip up excess track, today due to the surge and renewal in traffic, railroads are quite hesitant to outright abandon, sell, or rip up trackage and instead try to find alternatives to keep it down for possible future use.

And indeed, Rango makes some good points.  While deregulation and other recent measures (such as forcing truckers to have a work limit each day) have helped to level the playing field between trucking and railroads, overall the pendulum still swings in trucking's favor with having a mostly free highway to transport goods whereby railroads must pay for and maintain their own infrastructure.

Answer 2

Yes, you are right it is rather anti railroad, they are taxed on the property, the rails on the property and any buildings on that property. Additionally, when a peice of track needs upgraded or rebuilt the RR is responsible for it. The federal Gov't pays for upgrading andmaintaining the Interstate highway system. It makes it difficult for railroads to compete with the trucking industry. Trucks are taxed on fuel usage but US Govt figures show the average over the road truck pays about 70% of the actual road damage they incur. Guess who pays the balance???