Fiscal Cliff and NASCAR?Posted: January 2, 2013
So, today is January 2nd, 2013, and Wall Street is celebrating the last minute (actually last minute plus a day, or so, but, hey!, who is tracking tardiness when it is our politicians that are tardy) compromise resolving — temporarily, at least — the so-called fiscal cliff.
The American Taxpayer Relief Act of 2012 (H.R. 8) was passed by the United States Congress on January 1st, 2013, and is expected to be signed into law by President Barack Obama today. It primarily addresses the expiration of the Tax Relief, Unemployment Insurance Re-authorization, and Job Creation Act of 2010, considered by politician as a big-deal or third-rail.
While Wall Street is celebrating, the new act is viewed by many as just another kicking-the-can-down-the-street measure.
Time will show, I guess. Personally, I mostly find it amazing that this country’s leadership for a period of 17 month did nothing in spite of being fully aware of the dead-line, which was absolute, and the the potential cost of non-action.
Looking at the details of the bill should, I think, make anyone take notice, for, as it unfortunately always appear to be the case, it seems to be deliberately obfuscated, making is near impossible for a layperson (i.e. a voter) to understand from the text of the passed act what actually happens.
Finding the actual, full text of the act is complicated in itself (try it!) and the language in the act is what I refer to as being incomplete and relative, consisting of phrases such as:
(1) in subparagraph (C), by striking “and” after the semicolon; (2) in subparagraph (D), by striking the period and inserting” ; and”; and (3) by inserting at the end the following: “(E) for fiscal year 2013, reducing the amount calculated under subparagraphs (A) through (D) by $24,000,000,000”.
I certainly don’t know what that means, but since it involves, it would seem, 24 billion dollars, it looks important enough that it should be written out in full and absolute so the United States voters can understand what their politicians just agreed to on their behalves.
Moreover the bill seems to have been stuffed with (equally obfuscated) special considerations that have nothing to do with this all-important measure to avoid the dreaded fiscal cliff, such as this little indecipherable titbit:
“… the National Defense Authorization Act for Fiscal Year 2013, is amended— (1) by striking “that” before “the Russian Federation” and inserting “whether”; and 2) by inserting “strategic” before “arms control obligations.”
I certainly would like to know what this means…
The pork and special interest groups are, of course, well represented, dolling out benefits to algae producers (yes, you read correctly… algae,) rum producers, and Hollywood (yes, again you read correctly… Hollywood needs financial help to the tune of $315 million or so from 2013 through 2017, it would appear.)
My favorite obfuscated pork package in the act is clearly section 312, which seems to provide about $78 million in benefits to NASCAR tracks (euphemistically known as “motorsports entertainment complexes”):
“SEC. 312. EXTENSION OF 7-YEAR RECOVERY PERIOD FOR MOTORSPORTS ENTERTAINMENT COMPLEXES. IN GENERAL.— Subparagraph (D) of section 168(i)(15) is amended by striking “December 31, 2011” and inserting “December 31, 2013.”
Huh? Fiscal cliff avoidance? I think not.
To even begin to understand section 312, one has to dig through the Library of Congress, where — deep, deep down — a reference to section 168 is made. To find section 168 one has to be clear-minded enough to go to the Government Printing Office’s and look for it. I will save you three hours of digging and provide you with the link here.
If you manage to find the document “Family and Business Tax Cut Certainty Act of 2012,” filed, under authority of the order of the Senate of August 2nd, 2012 by Mr. Baucus from the Committee on Finance, and find, therein, a discussion of section 168, you will discover on page 48 the following neatly compacted text:
“12. 7-year recovery period for motorsports entertainment complexes (Sec. 212 of the bill and sec. 168 of the Code)
A taxpayer generally must capitalize the cost of property used in a trade or business and recover such cost over time through annual deductions for depreciation or amortization. Tangible property generally is depreciated under the modified accelerated cost recovery system (“MACRS”), which determines depreciation by applying specific recovery periods, placed-in-service conventions, and depreciation methods to the cost of various types of depreciable property. The cost of nonresidential real property is recovered using the straight-line method of depreciation and a recovery period of 39 years. Nonresidential real property is subject to the mid-month placed-in-service convention. Under the mid-month convention, the depreciation allowance for the first year property is placed in service is based on the number of months the property was in service, and property placed in service at any time during a month is treated as having been placed in service in the middle of the month. Land improvements (such as roads and fences) are recovered over 15 years. An exception exists for the theme and amusement park industry, whose assets are assigned a recovery period of seven years. Additionally, a motorsports entertainment complex placed in service on or before December 31, 2011 is assigned a recovery period of seven years. For these purposes, a motorsports entertainment complex means a racing track facility which is permanently situated on land and which during the 36-month period following its placed-in-service date hosts a racing event. The term motorsports entertainment complex also includes ancillary facilities, land improvements (e.g., parking lots, sidewalks, fences), support facilities (e.g., food and beverage retailing, souvenir vending), and appurtenances associated with such facilities (e.g., ticket booths, grandstands).
REASONS FOR CHANGE
The Committee believes that extending the depreciation incentive will encourage economic development. Thus, the provision extends the seven-year recovery period for motorsports entertainment complex property.”
Moreover, courtesy of paragraph 11(a) of rule XXVI of the Standing Rules of the Senate, one can find on page 103 the estimated budget effects of section 168 from the year 2013 through the year 2017, which is $78 million.
Phew! So now we know. Someone, somewhere decided (1) that NASCAR, a hugely profitable, multi-billion dollar corporation, needed $78 million in tax cuts to “encourage economic development” and (2) that it would be appropriate for such encouragement to be slotted into what is arguably one of the most controversial bills of the decade, centered around a massive discussion of tax avoidance, tax loopholes, and austerity.
This takes panache, and makes me want to know who, exactly, pushed that piece of pork into the act. Although a part of me says Wow!, then, on balance, I think that this may be one of the time where public encouragement of Seppuku may be warranted.
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