256 MULTIPLE PURPOSE RIVER DEVELOPMENT 



(Table 38) would be required. These deductions produce an 

 estimated net regional gain of approximately $130,000.^^ However, 

 the estimated gains to households in other regions in the country 

 stemming from the $540,000 difference in power bills, does not 

 entirely compensate for the increase in federal tax liabilities of 

 residents in these regions ($743,000 to $746,000 as estimated in 

 Tables 46 and 42, respectively). On balance, therefore, there is 

 some net income transfer to the Northwest in connection with the 

 federally developed hydroelectric site. 



If dynamic growth effects could be worked into the framework 

 of analysis, there is little question that, over time, capital inflows 

 into the region would be fostered to exploit complementary invest- 

 ment opportunities, followed by net in-migration, and other similar 

 phenomena associated with regional economic growth. At least, 

 this appears to be a tenable hypothesis and to a significant extent 

 is one of the objectives (higher criteria) which have been used to 

 justify the expenditure of federal funds for "the development of 

 the West." ^t- 



Aside from the interregional income redistributive effects, there 

 will be income transfers among members of society so long as the 

 incidence of taxes among individuals is not proportional to the 

 gains from the expenditures of such taxes. Furthermore, although 

 owners of capital services are broadly diffused, there will be some 

 income redistribution among owners to the extent that firms — 

 whose venture capital is supplied by different individuals — par- 

 ticipate to an unequal extent in the gains from federal hydro- 

 electric development. This will also be true of owners of other 

 factor services which are supplied to various firms that would 

 participate to different degrees under alternative approaches to the 

 development of hydroelectric sites. 



^ If data permitted a geographic breakdown to include only the relevant 

 power marketing territory in lieu of the Census region which includes Wash- 

 ington, Oregon, and California, the net gain to households in the marketing 

 territory probably would be greater, since about 90 per cent of the increased 

 federal tax liabilities would fall on regional residents outside the marketing 

 territory — Washington and California in this illustration. 



"For a discussion of the objectives which serve as the justification for federal 

 water resources development programs in the West, see Irving Fox, "Issues in 

 Federal Water Resources Policy," Law and Contemporary Problems, Duke Uni- 

 versity, Summer 1957. 



