During the mad dash to pass the fiscal cliff deal, clever legislators found time to insert pet projects into the already-bloated deal. On top of the $4 trillion this deal adds to the deficit, here are a few goodies for pet industries:
- Hollywood: Under this deal, Hollywood gets a $430 million tax break via “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. Guess Hollywood’s donations to Sen. Udall paid off afterall.
- Imported Rum: Puerto Rico and the U.S. Virgin Islands will receive $222 million through returned excise taxes collected by the U.S. government on rum produced on the islands and imported to the mainland.
- NASCAR: File this under, “huh?”. NASCAR received a $70 million boost by the extension of a “seven-year cost recovery period for certain motorsports racing track facilities.”
- Algae Growers: We know, this is almost a parody of itself. Algae growers were given a belated Christmas gift of $59 million “through tax credits to encourage production of ‘cellulosic biofuel’ at up to $1.01 per gallon. OK, which Congressman invested in this industry?
- Electric Motorcycle Manufacturers: Manufacturers will benefit from a $4 million expansion to include this industry of existing green-energy tax credits for buyers of plug-in vehicles.
- Banking: According to Alternet, Section 328 extends “tax exempt financing for York Liberty Zone,” which was a program to provide post-9/11 recovery funds. Rather than going to small businesses affected, however, this was, according to Bloomberg, “little more than a subsidy for fancy Manhattan apartments and office towers for Goldman Sachs and Bank of America Corp.”
- Railroads: Short-term and regional railroad operators garnered $331 million tax credit, or up to 50% of the cost to maintain tracks that they own or lease.
Unfortunately, these are likely not the only special interest perks woven into this lame deal, but what’s worse is that this was a missed opportunity for real reform. As economist Greg Mankiw, Harvard University, told the Wall Street Journal:
“The deal appears to offer no entitlement reforms, no tax reform, and higher marginal tax rates. After all the public discussion over the past couple years of what a good fiscal reform would like, it is hard to imagine a deal that would be less responsive to the ideas of bipartisan policy wonks.”