Tuesday, June 23, 2009

Unintended Consequences

The Metro train car that slammed into another on the Red Line killing 9 and injuring 76, was two months past due for scheduled maintenance on its brakes, and the car was an older model that federal officials had recommended be replaced because of concerns about its safety in a crash, according to the Washington Post.

From Concurring Opinions, via Taxprof, Taxes incentives may be a cause of the crash. Taxes not only raise revenue they influence behavior, intentionally or not so much.

Here the Metro authorities knew that the aging trains posed safety concerns, one reason they weren't so quick to ask, according to Prof. Sarah Lawsky is they were received money for keeping them.

The Metro Transit Authority sold equipment, including train cars, to another party then leases it back. The other party gets various tax advantages associated with owning the equipment that the Metro as a tax-exempt organization can't take advantage of. In return the company gives a cut of those tax savings back in cash to the Metro.

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