276 MULTIPLE PURPOSE RIVER DEVELOPMENT 



ticular region will fall approximately the same among regions, 

 irrespective of whether our assumed tax change favoring consump- 

 tion or that favoring investment is applied. The incidence will be 

 different among income groups, however, depending on which of 

 the two tax models is used. If we assume that development of the 

 Northwest hydroelectric sites as federal undertakings would fore- 

 stall reductions assumed in our tax model favorable to low-income 

 groups and consumption, approximately 54 per cent of the total 

 difference in cost would be borne by families with incomes under 

 $5,000 annually, and only about 8 per cent by those in the income 

 group exceeding $15,000 annually. On the other hand, if develop- 

 ment of hydroelectric sites as federal ventures would forestall a 

 reduction appropriate to our high-income, investment model, about 

 20 per cent of the total difference in costs would be borne by groups 

 with income under |5,000 annually, and close to 38 per cent of the 

 total difference by those in an income bracket exceeding $15,000 

 annually. 



Under private development of Northwest hydroelectric sites the 

 cost of power to customers would be greater than if the power 

 were supplied through public development. If private develop- 

 ment is undertaken with the aid of accelerated amortization privi- 

 leges, the cost of power to customers is not decreased. Those who 

 gain from such a policy are those who own shares of stock in the 

 private utility. From the customer's viewpoint, there would be 

 practically no advantages associated with private development of 

 hydroelectric sites; the gains from rapid amortization privileges 

 would go mainly to eastern investors in the private utilities, rather 

 than to consumers of electricity through lower power charges. 



To the extent that development of the Northwest is justified in 

 terms of equity considerations — of assistance to the newer, relatively 

 underdeveloped regions of the country because of the economic 

 advantages enjoyed by the more wealthy, more fully developed 

 regions — federal development of Northwest hydroelectric sites is 

 consistent with this objective. Private development undertaken 

 with the aid of accelerated amortization privileges is inconsistent 

 with this objective, since it does not result in any more attractive 

 power rates for developmental purposes than rates prevailing in 

 the absence of accelerated amortization. 



A public policy with one social objective in mind could result in 

 an income redistribution in addition to, or as a side effect of, the 



