Oct 27, 2016
Billions of Dollars in Tax Giveaways Are Expiring – Let Them
Post by Mary Kate Hopkins
Congress has the opportunity to give taxpayers a holiday season gift this year-billions of dollars in savings—and all without doing a thing. At the end of the year, dozens of special interest tax preferences are set to expire, and lawmakers can stand with American taxpayers and stop giving their money away to wealthy, well-connected interests.
Short-term tax giveaways are bad policy. These carve-outs reward special tax privileges to select industries, giving them an upper hand on the competition while making the tax code more complicated for everyone else. These businesses don’t need any extra help from the government.
The federal government currently provides a tax credit of 10 percent (up to $2,500) of the purchase price of an electric motorcycle. This tax credit is claimed by the purchasers, but it serves as a windfall for the few U.S. companies that make electric motorcycles. There are only two U.S. companies that primarily manufacture electric motorcycles, and both of them spent a lot of time and money lobbying for the provision. Lucky for them, Sen. Ron Wyden of Oregon fought to secure this special favor because one of those companies-Brammo-is located in his home state. Since then, these companies have reaped millions of dollars in benefits at our expense.
Nothing is more American that NASCAR, right? This must be the line that motorsport lobbyists used to secure the carve-out that allows owners of motorsports entertainment complexes to write off the cost of their facilities and improvements over just seven years, rather than the standard 39 years. This is corporate welfare epitomized-a multibillion dollar industry receiving favors because it has resources to lobby Congress. NASCAR and other motorsports companies are popular and profitable businesses that will still be successful without special tax preferences that other industries don’t get.
This carve-out provides a $1-per-gallon refundable tax credit for U.S. blenders of biodiesel. This provision alone would cost taxpayers over $2.5 billion for a two-year extension. This credit is nothing more than windfall for the handful of biodiesel producers operating today. For example, Darling Ingredients, a multi-million dollar company, has reaped millions in payments from the Treasury while this handout has existed. Picking winners and losers in the energy market is bad for Americans as taxpayers and as consumers.
FILM AND THEATER PRODUCTIONS
This is the “Hollywood tax credit.” It allows entertainment industry producers to write-off up to $20 million per film, production, or episode. Taxpayers should not be expected to foot the bill for productions that are often already well-financed and successful on their own. This is just another prime example of Congress’ failure to enact tax reform that would benefit all Americans rather a select, well-connected few.
Extending the tax credit that allows racehorse owners to depreciate their horses over three years instead of seven literally gives millions in tax breaks to millionaires. The owners of racehorses are known to be some of the most elite, wealthy people in the country. For example, net worths of owners from the 2012 Kentucky Derby ranged from $24 million to $4.1 billion. Wealthy Americans simply don’t need special tax benefits.