NASCAR, Hollywood, Algae Farmers Among Those Favored by Fiscal Cliff Pork

The government didn’t just kick the can down the road rather than tackle runaway entitlement spending in today’s fiscal cliff bill; a whole host of pork-barrel tax credits for various favored industries were extended en masse.

An entire section of the – Oh, good lord, they named this thing the “American Taxpayer Relief Act of 2012,” really?  – is devoted to detailing extensions in tax credits for loads of favored renewable or biofuel energy programs. Wind energy tax credits will be extended for a year, as well as credits for ethanol producers (relevant to Ron Bailey’s blogging today on crop yields slowing). The biofuel program will actually be expanded to add algae farmers to the list of producers, which is relevant as the Navy is spending millions on algae-based biofuels. This ultimately means the government is giving these guys tax credits to produce something that they then sell for a profit back to the government.

There’s also a whole section of non-energy-based tax credits that doesn’t even have a pretense of government-incentivized innovation to justify its status as crony capitalism. US News notes a couple of the big winners:

Hollywood

Making movies in America is big money, and Congress is doing its best to ensure the movie industry doesn't pack up and leave. Television and movie makers can continue to gross $15 million in breaks for filming in the U.S., $20 million for filming in low-income areas, an incentive for Hollywood that costs the country about $430 billion to maintain.

Motorsport Race Track Owners

A program that allows race track owners to deduct a total of more than $40 billion a year for their tracks, bleachers and concession stands also passed in the bill. Groups like NASCAR can continue to write off the maintenance costs of their tracks in a tax break that is similar to one amusement parks benefit from. The only catch is that the venue must have held an event on the premise sometime in the last three years.

In my eyes, the unfairness is not that some folks get these tax breaks, but rather that some folks don’t. I don’t confuse not taking money from businesses or individuals with giving money to them. But since the government isn’t actually cutting spending, those who don’t qualify for credits ultimately make up the difference for those favored crony capitalists who do get the write-offs.

So, while you will likely be paying more taxes even if you fall under the $450,000 annual income threshold, it’s going to be business as usual for a handful of corporate cronies who have the ears of Congress.

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  • Pro Libertate||

    Well, that's odd. I can't seem to find the spending cuts. Where are they?

  • DJF||

    When government taxes and spending goes up, your spending goes down. So see, there is spending cuts.

  • Pro Libertate||

    You're right, I haven't been clear. I want the government to cut its spending, not mine. The economy handles the latter.

  • Caleb Turberville||

    I look forward to the NASCAR/Hollywood/algae farmer coup d'etat on the first libertarian president's life.

  • Hugh Akston||

    Beat it kids! Come back when you've got connections!

  • Killazontherun||

    an incentive for Hollywood that costs the country about $430 billion to maintain.

    That can't be right unless you are talking about a scale of a hundred years as the entire profitability of the industry is only a fraction of 430 billion per year. I would guess close to 1/15th based on the end of the year grosses I've seen and guessing at the profit.

  • Killazontherun||

    Shit, meant 1/30th.

  • Killazontherun||

    No, no no 1/15th is fine. 1.1 billion would be low balling money made off of butts in theater seats much less other revenue streams.

  • DJF||

    Great, spend tax money buying bio-fuel that we already know is not economic in the vain hope that some small percentage of that tax money will go to research to make bio-fuel economically viable. If the government is already going to guarantee paying over market prices for fuel why should the suppliers divert money to new research, they are making a profit on their existing overpriced product.

    The best thing to do is let people invent and invest in biofueld and develop it economically

    Second best is to have X prizes to reward successful development

    Third best is to directly fund research

    The worse is to subsidize over priced production on the hope that some of that money will go to successful research on better technology.

  • The Derider||

    Carbon taxes would indirectly subsidize biofuel production, because biofuel production is a carbon-neutral process.

  • ||

    In my eyes, the unfairness is not that some folks get these tax breaks, but rather that some folks don’t. I don’t confuse not taking money from businesses or individuals with giving money to them. But since the government isn’t actually cutting spending, those who don’t qualify for credits ultimately make up the difference for those favored crony capitalists who do get the write-offs.

    I consider this a really key point.
    I would much rather have higher tax rates that were simple and flat with few deductions than have a tax code that is riddled with "incentives" to do this or not do that, with favors to some groups over others.

    Aside from the obvious unfairness of it (equal justice under law is violated), the ability to hand out such perks encourages exactly the same kind of rent seeking as direct subsidies. There is no difference between a tax credit and a subsidy but the name. And that means again that government is picking winners and losers rather than letting the market decide. And that consolidates power in the government.

    There really shouldn't be any libertarian hesitation to condemn special-interest tax breaks. The power to hand out special targetted tax breaks is as much a manipulation of private individuals as any other law. When the government picks your competitor over you via a targetted tax credit, you're just as out of business as if they passed a law and gave them a formal monopoly.

  • The Derider||

    Yes, but if Reason applied this sort of analysis to, say, the oil industry, they'd be biting the Kochs that feed them.

  • Jough||

    I'm not sure I understand the NASCAR issue here. How is not paying taxes on activities that represent a loss considered a give-away?

  • waaminn||

    Dude seems to be talking a LOT of smack over there.

    www.otAnon.tk

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