Nishant Malhotra Founder of Middle Road OPC Pvt Ltd & The middle Road platform on the evolving Sustainable Finance sector

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The need for high speed rail in the US and 1% tax policy for a sustainable social impact

This article elaborates on the importance of high-speed rail network in the US and policies for raising capital for the infrastructure spending. The section includes a brief documentary on the subject matter and its tremendous positive social impact within the society. This is a continuation of my article on the development of infrastructure in the US and low inflation.

First, high-speed railway network will reduce greenhouse emissions and builds on five sustainable development goals cementing principles of UN Global Compact: affordable and clean energy (7), decent work and economic growth (8), industry, innovation and infrastructure(9), sustainable cities (11) and community, and climate action (13).

Second, bring down costs of domestic airfare which are on an average higher than airfares in Europe. Further, generate jobs across all levels, i.e. labour and high-end engineering sector and kick start economic growth to a new level.

Third, the construction of the vast railway network would boost supply-side inflation, addressing low inflation concerns in the US if they do arise.The proposed high-speed rail greatly enhances productivity through reduction of travel time and promotes small and medium-sized companies across states, cities and counties. Further, it gives multiple choices to people to travel both for business and leisure. Here, a re-look at the Solow model will greatly help the US.

Let’s look at how the US can raise funds for the proposed infrastructure plan. One bipartisan way of raising funds would be to tax listed companies a surcharge tax between 0.75 to 1.25 % on the profits layered according to revenues of companies. One sad aspect of the reduction of taxes has been an increase in share buybacks rather than an exponential increase in allocation to capital spending and research. Share buybacks have become the best way of rewarding shareholders in the US since the ’90s and remain a contentious issue. The tax policy called as 1% tax would generate billions of dollars in cash for infrastructure spending per year considering the total stock of companies within the US ecosystem is in trillions of dollars. More on this at a later date.

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