On July 7, 2012, Chris Megerian and Ralph Vartabedian write in the Los Angeles Times that Governor Brown and the Legislature approve funds to begin the system in the Central Valley.
The state Senate authorized initial funding for California’s high-speed rail project, handing a victory to Gov. Jerry Brown and the Obama administration, which have been pushing hard for the first-in-the-nation bullet train.
It is unclear when construction on the largest infrastructure project in the country can begin; the state still needs a series of regulatory approvals to start the first 130 miles of track in the Central Valley. The plan also faces lawsuits by agriculture interests and potential opposition by major freight railroads.
But proponents rejoiced at Friday’s narrow 21-16 vote, which allocates roughly $8 billion for the first segment of track and related transportation projects. Barring insurmountable obstacles, Californians eventually will be able to ride a bullet train — traveling as fast as 220 mph — between Los Angeles and San Francisco rather than fly or drive on aging highways.
Once again, taxpayer monies and pledges are being allocated to enrich private sector productive capital ownership interests in the name of “job creation,” instead of ensuring that the infrastructure project is financed so that the companies benefiting from the public-supported contracts broaden ownership in the resulting productive capital assets.
Today we accept as normal public ownership of gigantic capital instruments like mass rail, subways, government office buildings, universities, water systems, and power systems. These government-owned enterprises and services could be transformed into competitive private sector companies managed by Private Facilities Corporations with the use of the asset or facility leased to the normal using body. The wages of the Private Facilities Corporation(s) are passed through to the leasing body. This would allow us to build the ownership of what is now public capital into individuals and reduce the cost of government, including public pension systems. Thus, when you build the ownership into the employees of the Private Facilities Corporation(s), who now have a vested interest in its quality of operation and maintenance, the contracted lease rental fee committed by the government entity will give the employee stockholders a reasonable return and lesson or replace the need for supplemental redistribution programs.
As for transforming government-owned enterprises and services into competitive private sector companies managed by Private Facilities Corporations with the use of the asset or facility leased to the normal using body, another variation is the Citizens Land Bank (CLB), also referred to as the for-profit Citizens Land Cooperative (CLC) and Community Investment Corporation (CIC),” a term used since the 1960s. The Center for Economic and Social Justice (CESJ.org) is now using the term “Citizens Land Bank” to avoid confusion with the now-popular usage of “Community Investment Corporation” as a non-profit vehicle with no direct citizen share ownership.
Under this financial mechanism, tax incentives and infrastructure reforms would encourage Citizens Land Banks, which would:
1. Make debt service on a leveraged CLB (a special kind of REIT) established within an eligible Super Empowerment Zone a tax-deductible business expense (as with an ESOP), so that area voters without savings can purchase a major block (up to 100%) of a CLB’s voting, full-dividend-payout common stock on borrowed funds repayable out of pre-tax CLB corporate profits and dividends. To the area voter, the principal payment on their stock acquisition loans would be treated as deferred income until CLB benefits are distributed as consumption incomes.
2. Give the CLB tax-free status (as with an ESOP trust or an REIT) so that shares of CLB stock acquired by area voters and CLB earnings can be accumulated within individual CLB accounts free of taxes until the benefits are distributed to participants, generally on leaving the area. When distributed, the CLB benefits would be taxed the same as distributions from an ESOP or IRA.
3. To create an in-house market for CLB shares, require the CLB to plan for the repurchase of distributed shares through a tax-free liquidity fund within the CLB, thus adding to the shares of remaining participants.
4. Encourage the CLB to pay out dividends to area voters as supplementary incomes from their growing equity stakes in local real estate development by allowing CLB dividends (as with dividends on ESOP shares) to be taxable at the personal level but deductible at the corporate level. Together with the incentives of #1 and #2 above, this feature, by eliminating the discriminatory double tax on corporate profits, helps to restore private property in corporate equity.
5. Defer personal income taxes on CLB-sheltered stock accumulations of area voters until the stock is distributed, sold and converted into spendable income. Allow the CLB participant a tax-free “roll-over” into a tax-exempt “Individual Retirement Account”, i.e., to further delay paying personal income taxes if the cash proceeds are re-invested into securities of other private sector equity investments. The objective here is to encourage savings and investment and to provide new sources for financing new ventures.
6. Similar to #5 above, provide a tax deferral to the seller of stock to a CLB (e.g., joint venture partners and other CLB investors) from any proceeds on the sale, provided that the seller re-invests the cash proceeds in securities of other productive enterprises within the Super Empowerment Zone. This simultaneously reinforces both the goal of expanded share ownership opportunities and of providing new sources for financing development within the zone.
7. Require an annual independent professional appraisal of the fair market value of CLB shares and provide regulatory oversight of CLBs to minimize abuses, promote understanding, disseminate reliable information on the CLB among area voters, and generally protect the property rights of CLB participants.
8. Monetize private sector productive credit by making “eligible” CLB and ESOP loans (as determined and allocated by local banks) within Super Empowerment Zones eligible for discounting under Section 13 of the Federal Reserve Act. New money issuances would be subject to 100% reserve requirement and made at a discount rate limited to a low Fed “servicing fee.” This reform would radically reduce capital credit costs, accelerate private sector growth rates and increase the competitiveness of enterprises within Super Empowerment Zones, reduce dependency on tax subsidies, and broaden citizen participation in capital ownership and profits.
http://www.latimes.com/news/local/la-me-bullet-train-20120707,0,3690682.story
