Government takeovers of investor-owned electric utilities
Government acquisition of investor-owned electric utility property has been proposed as a means of (1) sustaining utility plant construction programs, and (2) checking the upward spiral in electricity rates. This article examines the merits of government takeover of private electric utility property in the event such acquisitions may be deemed necessary to assure expansion to meet future needs. The presumed advantages of government takeover are (1) the avoidance of taxes, the most important of which are property taxes; and (2) lower interest costs obtainable through the issuance of tax-exempt bonds. The second advantage is really another form of tax avoidance. The author concludes that the avoidance of property taxes and other local taxes is largely fictitious, inasmuch as the government takeover simply results in a shift in the tax burden previously borne by the utility (but collected from its customers through the rate schedule) directly to utility customers and other taxpayers. There would, of course, be no shift in tax burden whatsoever if the government power system elected or was required to make full payments in lieu of taxes to state and local taxing units. Thus, the only remaining advantage of government takeover of investor-owned electric utilities is the avoidance of Federal corporate and individual income taxes. However, it is hard to see why the Federal government should encourage such tax avoidance as a solution to the deteriorated financial condition of some private utilities and their inability to obtain external financing on reasonable terms. (MCW)
- Research Organization:
- Richardson Associates, New York
- OSTI ID:
- 7249314
- Journal Information:
- Public Util. Fortn.; (United States), Vol. 98:10
- Country of Publication:
- United States
- Language:
- English
Similar Records
IOU taxes fade away. [Investor-owned utilities]
IOUs tax records refute their claims. [Investor-owned utilities]