NASCAR tracks rev up lobbying for tax break

Racetrack owners are revving up their efforts to protect the “NASCAR tax break” from critics who portray it as pure corporate pork.

The provision, which allows motor sports tracks to use a shorter depreciation schedule, is among the more than 50 tax preferences that expired at the end of 2013 after Congress failed to pass a so-called “extenders” bill.

{mosads}Fiscal watchdogs say the motor sports tax break, enacted in 2004, is the kind of narrow giveaway that gives the U.S. tax code a bad name, and lump it in with other extenders provisions that support the Puerto Rican rum industry and thoroughbred horses.

With that in mind, motor sports officials have accelerated their own lobbying efforts on Capitol Hill to battle back against a shorthand — “NASCAR tax break” — they say is misleading.

John Saunders, the president of the International Speedway Corporation (ISC), acknowledged that motor sports advocates have a tough fight against “a sexy sound bite.”

“It’s an asterisk in the extenders, yet it gets all this attention, mischaracterized,” said Saunders, whose company owns the Daytona International Speedway in Florida, the Talladega Superspeedway in Alabama and about a dozen other NASCAR tracks.

Congress is expected to restore at least some of the expired tax provisions by the end of the year, and motor sports companies are employing high-priced K Street talent to help them land in the winner’s circle.

There are roughly 1,200 auto racetracks in the U.S., according to industry advocates, the vast majority of which are small, local operations that aren’t affiliated with the big leagues of NASCAR.

Allowing those tracks to write off costs over a seven-year span lets them pour money back into their businesses, racetrack advocates say, spurring economic growth in individual communities around the country.

Those advocates also say the price for that spark is small, compared to others, and argue an extension would give tracks the certainty they need to plan improvements.

The Senate’s proposal to extend the current write-off schedule for racetracks for two years would cost about $71 million over a decade, and is part of a broader, $85 billion package to restore dozens of expired tax breaks.

Even that two-year extension, racetrack officials say, would only be enough to keep an even playing field with their true rivals — amusement parks such as Disney or Six Flags.

“It’s not like we think we need to have this special thing for us,” said Dan Houser, the ISC’s chief financial officer. “We just want to be not carved out from the group.”

While industry advocates say the tax preference is for more than just NASCAR tracks, ISC officials argue that motor sports tracks should be lumped in with amusement parks for tax purposes, because both tend to be travel destinations.

Racetrack officials also said they don’t receive the level of subsidies often given to stadiums for professional football and baseball teams, meaning they’d be at a competitive disadvantage on all fronts without the accelerated depreciation schedule.

Industry advocates said tax advisers started telling motor sports parks that they should get the same ability to write off costs as amusement parks in the 1970s.

But about 15 years ago the Internal Revenue Service started to question whether racetracks should get the same tax treatment as amusement parks, Houser said last week, leading advocates to turn to Capitol Hill for help.

Congress eventually passed the current temporary provision in 2004, during the heat of a presidential election in which both then-President George W. Bush and then-Sen. John Kerry (D-Mass.) were competing for the votes of “NASCAR dads.”

Critics of the provision on both the left and the right acknowledge that the cost of other temporary preferences dwarfs the incentive for motor sports tracks.

Still, Steve Ellis of Taxpayers for Common Sense said he didn’t buy the argument that motor sports and theme parks should be dealt with in the same way.

Ellis said the incentive subsidizes maintenance and improvements that tracks would have to do anyway, and that the chief beneficiaries of the preference are bigger companies like the ISC and the Charlotte, N.C.-based Speedway Motorsports.

“I don’t see how you can get around what it is — it’s corporate welfare,” Ellis said. “I don’t think anybody thinks of Mickey Mouse when they think of Talladega.”

Citizens for Tax Justice, a liberal group, has argued that the ISC and Speedway Motorsports have paid effective tax rates far below the top statutory rate of 35 percent in recent years. 

The group also says that if Congress were serious about overhauling the tax code, it could easily start with that sort of small, narrow incentive.

But even with its narrow focus, the motor sports tax break appears to have bipartisan support, given the number of tracks located around the country.

Sen. Debbie Stabenow (D-Mich.) and Rep. Tom Reed (R-N.Y.), both members of the tax-writing committees, have introduced measures to permanently extend the tracks’ current tax treatment.

Stabenow said last week that the Michigan International Speedway, also owned by the ISC, generates more than $400 million a year in economic activity. “It’s a matter of just talking about how this is an economic engine for many communities around the country,” Stabenow said.

Instead of a temporary extension, House Ways and Means Committee Chairman Dave Camp (R-Mich.) has sought in recent months to either restore temporary tax breaks indefinitely or discard them for good.

Camp has given no indication that he’s interested in a permanent extension of the racetracks incentive, and even motor sports advocates say they don’t believe the proposal has gained much traction on Capitol Hill. But track officials believe the tax break will survive in any package that temporarily restores extenders, such as the Senate bill.