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For a lesson on Washington, examine tax breaks in fiscal cliff law

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Original Publication: Tampa Bay Times (AP), January 10, 2013
Article Author:
January 10, 2013
Programs: Budget & Tax

WASHINGTON — Democratic Sen. Bill Nelson said his vote was a vote for the average guy. So did Republican Rep. Vern Buchanan of Sarasota.

"With a $16.3 trillion national debt and 7.7 percent unemployment, the last thing we need is a massive tax increase on hard-working Americans," Buchanan said after last week's tumultuous conclusion of the fiscal cliff standoff.

But neither Florida lawmaker mentioned the benefits delivered to another constituent they look out for in Washington: Daytona Beach-based NASCAR.

Despite alarm over the country's financial health, the fiscal cliff deal was packed — at the last minute — with billions of dollars in special-interest tax incentives for rum-makers, a tuna fish company, algae producers, Hollywood studios, racetracks and more.

The deals, still drawing scrutiny a week after being signed into law by President Barack Obama, provide a powerful lesson in the way Washington works. Special interests curry favor with lawmakers through political donations and employ teams of lobbyists to push for the breaks, which are sprinkled into sweeping legislation to attract votes.

Perpetuating a messy, pockmarked tax code, the more than $46 billion in new business tax incentives underscore how difficult it will be to achieve tax reform, a goal lawmakers say they must accomplish in the coming year as part of efforts to tackle the deficit.

"Politicians of both parties keep saying they want to 'close loopholes,' " said Robert Bixby, executive director of the Concord Coalition, a nonpartisan group focused on restraining government spending. "If they are serious about it, they blew a great chance to prove it. This certainly does not bode well for tax reform."

Steve Ellis, vice president of the budget watchdog Taxpayers for Common Sense, said the deals are "policy cockroaches" that feed voter cynicism: "Even when it can't be business as usual, it comes back to being business as usual."

Nelson defended his support for NASCAR by saying it could boost jobs. Buchanan has made similar arguments.

Nelson, who along with Buchanan has sponsored legislation to make the NASCAR break permanent, said after his vote that "now we've got to finish the job of fixing our country's financial ills with more targeted spending cuts and reforming our tax code."

But the tax handouts he supported work in the opposite direction. Many of the tax breaks had expired and the deal gives them new life, for at least a year, a favorable defensive position as talk of reform grows.

The racetrack benefit is worth $46 million in 2013 and estimated at $78 million over a decade.

Florida Republican Sen. Marco Rubio, one of only eight senators to vote against the fiscal cliff deal, this week assailed the "political pork" as part of a "total avoidance of our real fiscal problems."

Dan Houser, senior vice president of International Speedway Corp., which owns Daytona International Speedway, Homestead-Miami Speedway and 11 other racetracks across the country, denied his company was getting a cozy deal. He said the tax benefits go to other track owners and are eventually poured back into the facilities, creating jobs.

The tax break, he said, puts tracks on equal footing with amusement parks and sports facilities, often built with considerable public subsidy. "This is, in a sense, stimulus for the private sector," he added.

"I think there's a little bit of posturing going on," Houser said of outrage from some lawmakers who say they had little or knowledge of the tax breaks before voting. "It's been widely known that these tax extenders were expiring and they needed to be dealt with."

The goodies were put into the fiscal cliff bill as part of a last-minute deal cut by Vice President Joe Biden and Senate Republican leader Mitch McConnell. Finger-pointing ensued this week over who wanted them more, but the fact is, special interest carve-outs get bipartisan love.

Obama had been vocal about wind energy credits, which will benefit an array of companies, including Juno Beach-based Next­Era Energy.

NASCAR tracks have been getting a break for decades. The deal allows them to depreciate property over seven years versus the normal 15 or more years. In 2004, the IRS began challenging the treatment, and NASCAR and its industry partners stepped up lobbying on Capitol Hill.

Today top allies include Nelson and Buchanan, both of whom collected thousands in political contributions from employees for NASCAR and International Speedway Corp. In July 2011, Lesa France Kennedy and Brian France, the siblings that control ISC and NASCAR, hosted a fundraiser for Buchanan at Daytona International Speedway. Guests were asked to donate up to $25,000 to Buchanan's political committee.

A few months later, Buchanan, a member of the powerful Ways & Means Committee, introduced the Motorsports Fairness and Permanency Act. It attracted two-dozen co-sponsors, a number of them Florida lawmakers.

Nelson supports a Senate version introduced by Sen. Debbie Stabenow of Michigan, home to a track owned by International Speedway Corp.

"Tax reform is essential to reducing the debt," Nelson spokesman Dan McLaughlin said. "But that doesn't mean every so-called tax break is bad. An argument can be made that some provisions create jobs and boost the economy and don't exist merely to bolster someone's bottom line."

Buchanan, who has consistently railed against the growing federal deficit, did not respond to an interview request. When he drew scrutiny for the connection between the political contributions and his NASCAR bill in 2011, he simply told the Sarasota Herald-Tribune that jobs were his "No. 1 priority."

Fiscal pork

Some of the tax credits and subsidies Congress inserted

into the fiscal cliff legislation:

$78M tax subsidies for

NASCAR track owners.

$59M for algae growers

producing biofuel.

$62M tax credit for employers in American Samoa designed to benefit StarKist Tuna.

$222M in tax rebates for rum makers.

$248M in tax credits for filmmakers.

$2,500 tax credit for purchases of electric scooters.

Note: Some of these credits existed before, but were set to expire before Congress extended them.

Written By: Alex Leary

Original Publication URL: http://www.tampabay.com/news/politics/national/for-a-lesson-on-washington-examine-tax-breaks-in-fiscal-cliff-law/1269751

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