A watchdog group referred to as on Congress to refocus its priorities on serving to struggling communities after the final spherical of coronavirus aid included quite a few tax breaks for companies and Senate Majority Chief Mitch McConnell’s “wealthy, horse racing buddies.”
The coronavirus aid and omnibus spending invoice handed by Congress in December included dozens of tax-related measures, together with an extension of a tax break for racehorse house owners that has been a high precedence for the racing trade. McConnell represents Kentucky, residence to a few of the largest breeders and stables within the enterprise.
The coronavirus aid and omnibus invoice included a bit concerning the “classification of sure race horses as 3-year property,” (web page 4,911) which prolonged an IRS depreciation tax break for racehorse house owners via 2022 after it was set to run out on Dec. 31.
Depreciation permits individuals to put in writing off their belongings’ discount in worth over time. The horse racing tax break permits house owners to “depreciate the price of a racehorse 2 years outdated or youthful over three years, in comparison with seven years for different kinds of horses,” Bloomberg defined when the measure was prolonged in 2019 after a powerful push from McConnell and different Republicans.
Some Republicans objected to the measure.
“The COVID aid we have all been ready for: a tax break for racehorse house owners,” Rep. Ken Buck, R-Colo., sarcastically tweeted.
Sen. Josh Hawley, R-Mo., singled out the availability to criticize the listing of “company & authorities giveaways” included within the invoice whereas bigger aid checks he and Sen. Bernie Sanders, I-Vt., referred to as for weren’t.
Accountable.US, a progressive watchdog group, highlighted the tax break to name on Congress to deal with struggling communities fairly than rich curiosity teams when it takes up the following spherical of negotiations after President-elect Joe Biden takes workplace.
“To see actual financial restoration, the brand new Congress should flip the web page on the Trump-McConnell mismanagement of the well being disaster that made the wealthy richer and shortchanged these actually in want,” Kyle Herrig, the president of Accountable.US, stated in a press release to Salon. “McConnell has no excuse to hinder actual aid for struggling communities after letting his wealthy, horse racing buddies double down on taxpayer help.”
The measure was a “high legislative precedence” for the Nationwide Thoroughbred Racing Affiliation, which spent at the least $240,000 final yr to foyer on, amongst different issues, “basic horse racing tax points,” based on the group’s lobbying stories. The group backed the extension, arguing that “depreciation is essential as a result of it permits racehorse house owners to raised align the deduction of any yearling buy with revenue alternatives when the horse is racing.”
The NTRA has repeatedly praised McConnell for his “continued help” of the trade after Congress prolonged the tax break in 2018 and singled out the “efforts of Chief McConnell” in extending the availability once more final yr.
McConnell has additionally benefited from large donations from the household of Dick Duchossois, one of many largest shareholders of Churchill Downs, the Louisville racetrack that hosts the Kentucky Derby. His son, Craig Duchossois, has donated at the least $4.966 million to McConnell’s Senate Management Fund since 2016, based on Federal Election Fee data. Members of the Duchossois household have additionally donated greater than $37,000 to McConnell’s marketing campaign since 2005, based on FEC knowledge.
The equine trade has additionally benefited from different coronavirus aid measures, receiving tens of millions in Paycheck Safety Program loans from the Small Enterprise Administration although knowledge reveals the sum of money spent on horserace betting fell simply 1.3% final yr regardless of the coronavirus pandemic.
The beneficiaries included Matties Racing Secure, which obtained an $80,472 PPP mortgage in Might, based on PPP knowledge. The steady, which is partly owned by skilled gambler and horse proprietor Paul Matties Jr., races a horse named Stimulus Test, which gained two prizes for a complete of $40,100 final yr. Since Stimulus Test was positioned into service earlier than this yr, the steady can even reap the benefits of the depreciation tax break.
Matties informed Salon that he and his brother sought the mortgage to maintain the steady going after the New York Racing Affiliation canceled races indefinitely and doesn’t assume the tax break would assist his steady in any respect.
“It was simply well timed to decide on that identify,” he stated of the horse. “There was no different motivation. I used to be truly shocked it hadn’t been taken already.”
The PPP has helped 1000’s of companies climate the pandemic and hold their workers on payroll, however has additionally been broadly criticized for favoring bigger companies on the expense of smaller companies and minority-owned corporations. Greater than half of the $522 billion in PPP funding went to simply 5% of recipients, together with dozens of nationwide chains, based on an evaluation by The Washington Put up. Some small companies sued banks that administered this system for favoring large present shoppers on the expense of actually small companies. Minority-owned companies have been notably impacted by these points and struggled to seek out banks that will settle for their functions, based on an Related Press evaluation.
The horse racing tax break was considered one of practically 80 tax-related provisions within the newest spherical of aid. The invoice additionally allowed corporations to deduct PPP loans from their taxes, prolonged the “three-martini lunch break” that permits companies to put in writing off eating bills, and included further breaks for auto racing tracks, distillers, and brewers.
Price range watchdogs have lengthy criticized the horse racing tax break for serving to the rich, however the provision has repeatedly been prolonged with McConnell’s help.
“It simply smacks of a giveaway to the wealthiest of Individuals,” Steve Ellis, the vice chairman of the nonpartisan Taxpayers for Widespread Sense, informed Bloomberg, including that the availability does not make “any sense from an financial perspective.”