The Willamette River Case: Gains 241 



lishments of a commercial or industrial character? On that part of 

 the total federal sales which ends up in factor services via the 

 public distributors (13.15 per cent), the differences in operating 

 costs in which capital factor services share would be approximately 

 $195,900 (item B-2 of Table 49). If we assume that 55 per cent of 

 this is retained as rewards to capital, the before-tax share going to 

 capital would amount to approximately $107,800. Assuming a 

 marginal tax rate on corporate income of 50 per cent, only half of 

 this would be retained as rewards to capital and the remainder 

 would appear, granted our approach, as a reduction to an equiva- 

 lent amount in tax liabilities of the general taxpayers (items D and 

 E-I and E-2, of Table 49). Furthermore, if we assume that a 

 quarter of the equity shares of these regional enterprises are held 

 outside the region, the final distribution of gains which originally 

 went to capital ($107,800) would be divided between the Pacific 

 Coast region and other regions in the proportion of about 44 and 

 56 per cent respectively. 



A part of the gains to commercial enterprise from resale of 

 federal power by public bodies may be absorbed by complementary 

 factor services. Corresponding to capital's share, labor in the 

 enterprises is assumed to obtain 12 per cent of the gain from less 

 expensive power. In this case, its share of the $195,900 would be 

 about $23,500, most of which would accrue to households in the 

 region. 



We assume that the remaining 33 per cent of the difference in 

 costs of federally developed power resold through public dis- 

 tributors is passed on to customers in the form of lower prices for 

 commodities and services. So consumers would share in the gains 

 to the extent of about $64,600. The locus of the ultimate distribu- 

 tion of these gains will be governed by the extent to which the 

 commodities in question enter into the export trade of the region. 

 Since the Northwest is a producer of primary commodities — 

 exporting a large proportion of its timber and products of fisheries 

 and farms — we assume that 33 per cent of the output for which 

 the power is used would be exported. On this basis, residents of 

 the region would enjoy two-thirds of the gain to consumers 

 ($43,000), while a third ($21,500) would accrue to the regional 

 enterprises' customers who are outside the Pacific Coast region. 



Table 50 summarizes the distribution of regional gains, to the 

 extent that we can do so. 



