Amtrak At Twenty End Of The Line For Taxpayer Subsidies by Jean Love, Wendell Cox, and Stephen Moore
This year Amtrak is celebrating its silver anniversary. Unfortunately, after 25 years of federal ownership and $13 billion of federal subsidies, Amtrak appears no closer to financial independence than the day taxpayer assistance began. This study shows that virtually every stated justification for continued Amtrak subsidies is based on myth, not reality.
Amtrak makes a negligible contribution to the nation's transportation system. Amtrak represents just .007 percent of all daily commuter work trips and just 0.4 percent of all passengers making intercity trips.
Amtrak's typical riders are not low-income Americans. Only 13 percent have incomes below $20,000.
Amtrak has virtually no impact on reducing traffic congestion, pollution, or energy use. Even a doubling of train ridership would reduce energy consumption and traffic congestion by less than 0.1 percent.
Amtrak is by far the most highly subsidized form of intercity transportation. The average taxpayer subsidy per Amtrak rider is $100, or 40 percent of the total per-passenger cost. On some of the long-distance routes, such as New York to Los Angeles, the taxpayer subsidy per passenger exceeds $1,000. It would be cheaper for taxpayers to close down expensive lines and purchase discount round-trip airfare for all the Amtrak riders.
Introduction
In 1970 Congress created Amtrak, the National Passenger Railroad, as a publicly owned for-profit company. [1] Twenty-five years later, Amtrak remains heavily dependent on public subsidy; taxpayers contributed more than $1 billion to Amtrak in 1995. [2] And between 1970 and 1995, taxpayers provided more than $13 billion in federal capital and operating support of the passenger rail system. [3] States have contributed additional funds. More than two decades after Congress intended it to become financially solvent, Amtrak commercial revenues cover less than two-thirds of total costs. [4]
Amtrak is unique among forms of intercity transportation--including airlines, buses, and private vehicles--in several respects. First and foremost, Amtrak is the only publicly owned form of intercity transportation. It has by far the highest unit costs (per passenger mile) of any intercity mode--double the highest cost alternative. Amtrak carries the smallest number of passengers of any intercity mode of transportation, and it serves a disproportionately high percentage of affluent passengers. And Amtrak is the only intercity mode that requires net public subsidies.
Amtrak now needs additional public financing and has asked Congress to create a trust fund for its capital needs. Unlike the trusts for highways and air, which are derived from taxes on their respective users, the proposed Amtrak trust fund would be financed not by ticket taxes paid by its passengers but by taxes on road users--that is, on people who do not use Amtrak. Opponents of phasing out operating subsidies or privatizing the rail system justify continued taxpayer assistance by contending that Amtrak has many benefits. The alleged benefits include the following:
Amtrak is a heavily used form of intercity transportation;
Amtrak provides crucial transportation for lower-income Americans;
Amtrak is a national transportation system serving the whole nation;
The favorable European experience with subsidized rail service is transferable to the United States;
Amtrak is energy-efficient and good for the environment;
Passenger rail requires only small taxpayer subsidies;
Amtrak is not more heavily subsidized than other transportation modes;
Amtrak reduces traffic congestion;
Amtrak provides indispensable intercity transportation to areas outside the Northeast Corridor.
This study demonstrates that these claims about Amtrak are based on myth rather than reality.
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