Capitalist ‘SILO’ Tax Schemes Threaten All Transit Workers and Riders

LOS ANGELES, CA — You may never have heard of SILO, but this tax evasion scheme of the MTA is one of the reasons why school children lack books and clinics and hospitals in working-class neighborhoods have closed down. Taxes that should have gone to pay for these services were pocketed by the corporations in SILO: Sale In, Lease Out. Now that it has blown up in their face, the MTA and the public officials are going to make the riders and MTA workers pay in the upcoming contract.

Starting in the late 1980’s, Los Angeles MTA and Rapid Tranist Division (RTD) entered into rip-off tax deals with private investors. Over the years MTA sold $1.5 billion worth of transit assets to large banks for $65 million. In all, 1,000 LA Metro buses, trains, five transit divisions and even a parking lot were sold. (LA Times 10/18/ 08) After buying government property for pennies on the dollar, the banks stood to make extra money by leasing the property back to MTA. But, the big prize was the $4.4 billion nationwide tax swindle that these banks gobbled up.

LA MTA is one of the largest players in these illegal tax scams. After repeated IRS warnings, SILO’s were ruled an abusive tax shelter in late 2003. The investors had until the end of 2008 to settle up. Losing their huge tax break, banks searched for a way out.

As the U.S. capitalist economy plunged, the banks found their escape hatch. The insurer for the SILO’s was AIG, who crapped out so big they required two federal bailouts at $150 billion. When AIG’s credit rating dropped, the banks were off the hook. Thirty-one of the biggest public transit agencies in the U.S. were left holding the bag. Banks now own trains, buses and transit property valued at $16 billion that they no longer want to keep on leasing to the transit agencies but that these can’t afford to buy back.

Like the nearly bankrupt Detroit auto bosses, but with much less publicity, the heads of major transit agencies, including MTA’s Roger Snoble, scurried to Washington for help to buy back the equipment. Unlike the auto bosses, they didn’t get it.

They need public transit to get workers to work. But as with the auto industry, whether bailout or bankruptcy, a re-organization will land squarely on the backs of the workers and riders of public transit. Black and Latino workers who rely on public transit to get to their jobs will be disproportionately affected by racist cuts. If we look at the give -backs forced on auto workers by union misleaders, we can see what capitalism is planning for workers at LA Metro: lower wages, trashed work rules, costlier medical and pension plans.

The grinding economic train wreck is teaching us an old lesson anew: we have nothing to lose and everything to gain by getting rid of a system that has one ugly surprise after another for masses of workers, including those of us who work in and use public transit.

Our CHALLENGE in LA Transit

All three LA Metro contracts are up June 30, 2009. The heads of the unions, together with MTA’s new boss, will prepare take-away contracts for us. Our PLP transit club met to plan how to put CHALLENGE, in the hands of many more of our co-workers. By raising the number of readers and communist political discussions, transit drivers, mechanics, and clerks can advance under attack. With CHALLENGE’s revolutionary outlook and with deep, long-term relationships with our friends who read the paper, we can fight the bosses’ attacks and build a growing hatred of the racist profit system that threatens us, and finally steer it to the junkyard of history where it belongs.

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