More on That
I continued to think about my little idea, and it dawned on me that this is a similar concept to municipal bonds, which provide a tax break in order to provide an incentive to “invest” in schools and public works projects.
The difference is that with munis the local government is using the tax code to save itself money. This is, ultimately, a government expenditure at the federal level. Munis are issued to citizens by small shops within the larger government “family.” The federal government is subsidizing their investments in the local public sector through decreased tax revenue.
In the case of my infrastructure scheme, you’re actually seeking to manipulate the way social costs and benefits are distributed.
Programs like TARP were focused on bailouts, which are more accurately termed a “socialization of losses.” If a bank makes a mistake we all suffer, not just the shareholders and debt holders of that company.
What hit me is that my scheme is actually the de-socialization of benefits.
Unless privately monetized by tolls, fees, or rents, infrastructure is a common good that benefits all but doesn’t make sense as an investment for any one independent actor. Therefore, the government normally steps in to allow essentially a pooled fund of taxes to provide these assets to society. Society then shares in the dividends.
This scheme uses private capital but employs tax contributions to consolidate the broader social benefit into a return on investment for the private citizen or organization that contributes the capital.