Biden claimed, without evidence, that racehorse owners receive tax breaks worth almost $9 billion. The president made that remark while advocating for having the federal government pay to provide free tuition for community college students.
Biden: Everyone should be able to go to community college for free, for free. That costs $9 billion. And we should pay for it. And the tax policies we have now, we should be able to pay for you. You spend almost that much money as a break for people who own racehorses.
Biden is right that it would cost about $9 billion to provide free tuition at the two-year colleges, according to the Department of Education. But we found no evidence of a $9 billion tax break for racehorse owners. The White House did not provide any evidence, and tax and budget experts we interviewed were left scratching their heads trying to figure out what the president meant.
There was criticism late last year of certain tax provisions contained in a massive $2.3 trillion bill that then-President Trump signed into law on Dec. 27 to fund the government and provide COVID-19 relief.
Among other things, the bill contained provisions that benefited racehorse owners. “The provision most people focus on is the special cost-recovery rule for racehorses age 2 or younger,” Howard Gleckman, a senior fellow at the Tax Policy Center, told us.
“Most horses must be depreciated over 7 years, but one of the tax extenders temporarily allows these young horses to be depreciated over just 3 years,” Gleckman explained. “This is scheduled to expire at the end of 2021.”
But the Joint Committee on Taxation, Congress’ nonpartisan scorekeeper, said that provision had no impact on federal revenues, despite criticism of it. “Special depreciation rules for young racehorses may be indefensible as tax policy but they don’t cost the government a lot of money, at least in the context of the federal budget,” Gleckman said.
“Horse breeding overall is a relatively small business as these things go: about $1b annually in revenues” for all North American breeders, Gleckman said, citing 2019 data from the Jockey Club. Alicia Hughes, a spokeswoman for the National Thoroughbred Racing Association, also cited the $1 billion in annual revenues in an email to us about Biden’s statement.
“The President is NOT correct when he says the tax break for horse owners costs almost $9 billion – especially when the total sales figures for horses at public auction is only around $1 billion,” she said.
Alex Waldrop, CEO of the National Thoroughbred Racing Association, said: “I don’t really know what he’s referring to.” He was not alone.
Steve Ellis, president of the government waste watchdog group Taxpayers for Common Sense, said Biden’s remark about racehorse owners “leaves me scratching my head,” adding, “for the life of me I can’t figure out what he was referencing beyond this relatively small provision.”