Congress Considers Tax Breaks From Horse Racing To Stock Car Racing
May 12, 2014 by Personal Liberty News Desk
WASHINGTON ‚ÄĒ Horse racing may be thought of as the sport of kings, but the National Thoroughbred Racing Association says breeders and stable owners need a tax break just like everybody else.
Stock car racing has a regal status among its followers, but NASCAR has its hand out, too, as do taxpayers in seven States with no income tax who pay state sales taxes and are able to deduct them from Uncle Sam‚Äôs tax bill.
The three are among the strange bedfellows who benefit from targeted tax breaks that expired at the end of 2013 and that the Senate and House of Representatives are now looking to restore.
‚ÄúI especially appreciate that (Congress) understands the continued importance of our industry and the contribution of the equine economy to job creation and added investment,‚ÄĚ said Alex Waldrop, the president of the thoroughbred racing association
The Senate legislation, which is expected to be voted on on the floor this week, combines more than 50 of the so-called tax extenders Congress awarded at different times for different constituencies, everything from helping families to pay for college, homeowners to deduct mortgage expenses, business to benefit by giving away food inventory, and to hire veterans. Senator Kay Hagan (D-N.C.) included that provision with a bill called ‚ÄúHire a Hero.‚ÄĚ
The tax extenders bill would reinstate them for two years at a cost to the treasury of $85 billion. Supporters are facing some stiff opposition from the right and the left, who say they create favorites in the tax code.
‚ÄúCongress is able to hide the true cost of these tax breaks by renewing them every two years,‚ÄĚ Steve Wamhoff, the legislative director for Citizens for Tax Justice, a liberal research center, said in a newspaper opinion piece. ‚ÄúBut the truth is, if allowed to continue indefinitely, these corporate tax breaks will balloon the deficit by $700 billion over the next decade.‚ÄĚ
The diverse interests that see their tax breaks as a matter of fairness make for a colorful coalition. They also have powerful patrons.
Senate Majority Leader Harry Reid (D-Nev.), who represents one of the seven States with no State income tax, has championed the legislation enabling filers who itemize to deduct State sales taxes on Federal returns. Taxpayers who pay State income taxes are able to deduct them.
Senate Minority Leader Mitch McConnell (R-Ky.) has led an effort to allow the racehorse industry ‚ÄĒ a staple of the Blue Grass State ‚ÄĒ to depreciate its product over a shorter period, three years instead of seven.
Senator Debbie Stabenow (D-Mich.), who represents automotive interests, got the so-called NASCAR provision, which allows the depreciation of motor sport facilities over seven years instead of 15 or more, reinserted in the Senate Finance Committee bill last month. The panel‚Äôs chairman, Senator Ron Wyden (D-Ore.) had initially removed it from consideration.
Like virtually all the tax extenders, Stabenow‚Äôs provision was popular. Among those that get the biggest raves is the sales tax deduction.
For years, taxpayers who itemize deductions in the seven States without State income taxes ‚ÄĒ Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming ‚ÄĒ railed against not being able to deduct sales taxes. The 1986 Tax Reform Act wiped out that benefit. Two States, Tennessee and New Hampshire, tax dividends and interest income. The provision gives U.S. taxpayers who itemize the choice to deduct sales taxes or income taxes.
‚ÄúWe would like to make the state and local sales-tax deduction permanent and have parity with other states,‚ÄĚ Senator Maria Cantwell (D-Wash.) said at the Finance Committee hearing on the bill. ‚ÄúThe 24 percent of Americans who claim state and local sales-tax deductions shouldn‚Äôt constantly have to question whether they will be able to make that deduction.‚ÄĚ
The entire bill is a tougher sell for Sen. John Cornyn, R-Texas. He wants to make the deductibility of state sales tax permanent, a huge issue for the Lone Star State, not just have it extended periodically. But other breaks trouble him.
Cornyn, the Senate minority whip and a Finance Committee member, said during a call with reporters that he supported many of the provisions but didn‚Äôt like that so many tax breaks were collected in one package.
‚ÄúThis is a terrible way to do business, and it‚Äôs going to produce a flawed product,‚ÄĚ he said.
Rep. Kevin Brady, R-Texas, a member of the House Ways and Means Committee, prefers the case-by-case approach his panel is taking with the extenders. He‚Äôs confident that the House will make the sales tax deductibility permanent.
‚ÄúSince it was reinstated in 2004, we‚Äôve saved Texans $9.6 billion,‚ÄĚ Brady said in an interview.
The NASCAR provision is also popular. The International Speedway Corp., which owns 12 tracks ‚ÄĒ including in Kansas City, Kan., Daytona Beach and Homestead, Fla., and Darlington, S.C. ‚ÄĒ is an enthusiastic supporter.
‚ÄúWe spend $120 million to $150 million a year on capital improvements,‚ÄĚ International Speedway Corp. spokesman Lenny Santiago said.
The Daytona International Speedway, one of the most famous sites in racing, has just begun a $400 million stadium renovation. ‚ÄúThese capital projects create a significant amount of economic opportunity,‚ÄĚ Santiago said.
But an increasingly loud chorus of naysayers is objecting to the tax breaks.
‚ÄúIn general, we view extenders as handouts to particular groups,‚ÄĚ said Barney Keller, a spokesman for the Club for Growth, a conservative fiscal policy organization. ‚ÄúAll tax treatment should be fair and equal.‚ÄĚ
The group plans to ‚Äúscore‚ÄĚ the Senate vote, meaning it will look favorably on members who vote against the bill.
¬©2014 McClatchy Washington Bureau