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WASHINGTON, D.C. – The last minute deal on Capitol Hill to avert going over the fiscal cliff is being billed as the salvation of middle-class taxpayers and the unemployed, but they aren’t the only ones who will benefit from the gamesmanship in Washington.
In spite of continued rhetoric on both side of the aisle about the need to eliminate pork barrel spending and cut out benefits to the most wealthy, this 150-page deal has dozens of tax breaks for favored industries tucked away in the fine print.
The plan calls for the federal government to forego collecting $100 billion in tax revenue over the next two years by offering special tax credit extensions to a wide range of select businesses. Such extensions are not unusual as part of major tax and spending bills, but in light of the crisis our government is said to be in, it did cause more than a few to question their inclusion in the bill.
The nonpartisan Committee for a Responsible Federal Budget said these “tax credit extenders[set]a bad precedent for future extensions.” The mix of tax perks for the next two years includes some worthy tax breaks such as incentives for employers to hire veterans, but raised a few eyebrows when it also allowed for tax breaks to:
- $430 million for Hollywood through “special expensing rules” to encourage TV and film production in the United States. Producers can expense up to $15 million of costs for their projects.
- $331 million for railroads by allowing short-line and regional operators to claim a tax credit up to 50 percent of the cost to maintain tracks that they own or lease.
- $222 million for Puerto Rico and the Virgin Islands through returned excise taxes collected by the federal government on rum produced in the islands and imported to the mainland.
- $70 million for NASCAR by extending a “7-year cost recovery period for certain motorsports racing track facilities.”
- $59 million for algae growers through tax credits to encourage production of “cellulosic biofuel” at up to $1.01 per gallon.
- $4 million for electric motorcycle makers by expanding an existing green-energy tax credit for buyers of plug-in vehicles to include electric motorbikes.
One of the reasons the Senate has not proposed a budget in over three years is because the spending method being employed now removes lawmakers from having to stand behind a unified budget. By continuing to pass “emergency” tax and spend bills they can slip in their pet projects and pass on breaks to favored constituents under the cover of whatever the current “crisis” happens to be.
Hollywood, for example, appears to be getting a major payback for its not-so-subtle support of Democrat candidates and causes. In a year when the industry enjoyed a record $10.8 billion in revenue, it is afforded approaching half a billion in tax credits.
It’s sure to be a comfort to those 77% of American households whose taxes went up because of this bill.