American Pharoah may not have won Sports Illustrated's "Sportsperson of the Year" award, but horse racing scored a different type of victory on Tuesday.
Congress plans to extend tax breaks for the horse racing and motorsports industries as part of the 2016 omnibus spending and tax extenders package released late Tuesday after weeks of negotiations between Republicans and Democrats.
The so-called "NASCAR tax break," worth an estimated $11 million for the 2015 tax year, does not really apply to the stock car racing organization itself. Instead, it allows the owners of "motorsports entertainment complexes" -- that is, race tracks -- to write off construction and renovation costs over a condensed depreciation period, lowering their overall tax bill. Most tracks, not just those that host NASCAR events, are eligible.
The tax break was first enacted in 2004, but race tracks have used it for decades, according to industry officials. The industry and some lawmakers have sought to make it permanent, but Congress has typically chosen to extend it on a year-by-year basis. The auto industry says the provision allows track owners to put more money back into their businesses, though the tax break watchdogs have criticized the move, including the Citizens for Responsibility and Ethics in Washington.
The horse racing industry, meanwhile, will benefit from the extension of a tax break for thoroughbred race horses that comes at an estimated cost of between $74 million and $97 million. That tax break allows owners to classify horses as "three-year property" and lets them accelerate the depreciation period of certain thoroughbreds.
That "better reflects the length of a typical racehorse's career," according to some industry insiders, while the National Thoroughbred Racing Association has said the tax break "indicates that lawmakers understand the contributions our industry makes to job creation and the country’s overall economic health."
That provision was originally a product of the 2008 farm bill, at the insistence of current Senate Majority Leader Mitch McConnell (R-Ky.), whose home state is the cradle of American horse racing. It has been extended each year since (sometimes retroactively) despite criticism from some Democrats that it primarily benefits wealthy horse owners, given the exorbitant costs of raising and training champion thoroughbreds.
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