Tax Deal Derailed DC Train Upgrade

Outlawed tax shelter scheme blamed for lack of modern safety features
By Rob Quinn,  Newser Staff
Posted Jun 26, 2009 6:17 AM CDT
Tax Deal Derailed DC Train Upgrade
Officials continue to work around the scene of a rush-hour collision between two Metro transit trains in northeast Washington, D.C., Tuesday evening, June 23, 2009.   (AP Photo/Jacquelyn Martin)

Safer cars might have saved lives in Monday's DC train crash, but a tax-dodge deal made with a bank prevented the transit authority from replacing aging stock until 2014, the Wall Street Journal reports. The National Transportation Safety Board urged the authority years ago to either replace its older cars or add safety features, but the authority said it was unable to do so under a "tax advantage" agreement in which its rolling stock was sold to a bank and leased back.

Such deals, which let banks claim tax deductions on the depreciation in return for payments to municipalities, were outlawed in 2004, but earlier contracts still stand. The transit authority appears to have "disregarded risks to passenger safety in order to fulfill a contract entered into as an accommodation party to a tax shelter," railed GOP Sen. Charles Grassley, calling for measures to ensure new funding for the Metro isn't used to pay off its tax-shelter partners.
(More tax shelter stories.)

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