Huge package of tax breaks up for vote in Congress
05/13/2014 12:54 PM
05/13/2014 1:00 PM
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’s 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. The Senate voted 96-3 on Tuesday to open debate on the tax bill.
“I especially appreciate that [Congress] understands the continued importance of our industry and the contribution of the equine economy to job creation and added investment,” said Alex Waldrop, the president of the thoroughbred racing association.
The Senate legislation combines more than 50 of the so-called tax extenders that Congress awarded at different times for different constituencies, everything from helping families to pay for college, homeowners to deduct mortgage expenses and business to benefit by giving away food inventory and by hiring veterans. Sen. Kay Hagan, D-N.C., included that provision with a bill called “Hire a Hero.”
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.
“Congress is able to hide the true cost of these tax breaks by renewing them every two years,” Steve Wamhoff, the legislative director for Citizens for Tax Justice, a liberal research center, said in a newspaper opinion piece. “But the truth is, if allowed to continue indefinitely, these corporate tax breaks will balloon the deficit by $700 billion over the next decade.”
The diverse interests that see their tax breaks as a matter of fairness make for a colorful coalition. They also have powerful patrons.
Among the breaks getting the biggest raves is the sales tax deduction.
For years, taxpayers who itemize deductions in the seven states without state income taxes — Texas, Alaska, Florida, Nevada, South Dakota, Washington and Wyoming — 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.
Sen. John Cornyn wants to make the deductibility of state sales taxes 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’t like that so many tax breaks were collected in one package.
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’s confident that the House will make the sales tax deductibility permanent.
“Since it was reinstated in 2004, we’ve saved Texans $9.6 billion,” Brady said in an interview.
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