Racetrack Owners Seek to Put the Brakes on the Term: ‘NASCAR Tax Break’

The No. 88 Diet Mtn Dew/The Dark Night Rises Chevy does donuts around the iconic Batman Tumbler on the front stretch at Michigan International Speedway on June 14, 2012 in Brooklyn, Michigan.
National Journal
Billy House
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Billy House
July 13, 2014, 4:26 p.m.

Mo­tor racetrack own­ers are wav­ing the red flag, call­ing for a stop to what they say is false la­beling of the long­time tax pro­vi­sion they are ask­ing Con­gress to re­new — tak­ing is­sue with it’s be­ing called the “NAS­CAR Tax Cred­it.”

That phrase may be catch­i­er than the “tax treat­ment of mo­tor­s­ports fa­cil­it­ies.” But they say it is not cor­rect, be­cause the tax pro­vi­sion doesn’t dir­ectly be­ne­fit the sanc­tion­ing body of stock-car ra­cing it­self, even if there are in­ter­con­nec­tions.

“It’s like call­ing some sta­di­um tax break an NFL tax break,” protests Brandon Ig­dal­sky, pres­id­ent and CEO of the fam­ily-owned Po­cono Race­way in Pennsylvania, home to NAS­CAR and In­dy races as well as a vari­ety of events for nearly 40 oth­er or­gan­iz­a­tions. In fact, the United States has more than 1,200 racetracks, many of which don’t run NAS­CAR com­pet­i­tions.

“This is not about NAS­CAR rev­en­ue. Second of all — it’s not a tax break,” adds Daniel Houser, seni­or vice pres­id­ent and chief fin­an­cial of­ficer and treas­urer for the In­ter­na­tion­al Speed­way Corp.

At is­sue is a pro­vi­sion that ex­pired at the end of 2013, along with more than 50 oth­er spe­cial­ized tax breaks. This par­tic­u­lar one has for years al­lowed all sorts of mo­tor racetracks to de­pre­ci­ate or write off the costs of cap­it­al im­prove­ments over a sev­en-year time­frame — faster than most oth­er busi­nesses.

Mo­tor-racetrack own­ers say it en­ables them to more quickly free up money, some of which, they say, they plow back in­to in­fra­struc­ture, safety, and oth­er im­prove­ments — help­ing loc­al eco­nom­ies and cre­at­ing jobs. Racetrack own­ers ar­gue that it’s like the per­man­ent tax break giv­en to theme parks.

The pro­vi­sion was even co­di­fied in 2004. Still, in this pay-as-you-go era, the tax break has con­tin­ued to re­quire peri­od­ic re­new­als by Con­gress. And now, sud­denly, re­new­al has be­come not so auto­mat­ic.

It turns out that even if the ste­reo­types are true that red-state fisc­al con­ser­vat­ives in Con­gress are more likely to be NAS­CAR fans, any such tie-in is not ne­ces­sar­ily help­ing the cause for re­new­al, and may even be hurt­ing it.

That’s be­cause con­ser­vat­ives and oth­ers in Con­gress are fo­cus­ing more nowadays on what they say is wrong with the na­tion’s tax code and policies — and among their top tar­gets are so-called spe­cial-in­terest carve outs or loop­holes.

The Sen­ate Fin­ance Com­mit­tee has ap­proved le­gis­la­tion that would re­new most of the ap­prox­im­ately 50 tax breaks that ex­pired at the end of 2013, in­clud­ing the racetrack item.

But the hurdle for the pro­vi­sion is that the cur­rent House Ways and Means Com­mit­tee chair­man and many Re­pub­lic­ans on the pan­el are in­sist­ing that they still want do some type of tax re­form, which, for now, means not simply re­do­ing the dozens of tax-ex­tenders that ex­pired at the end of 2013. They ar­gue that these ex­tenders need to be in­di­vidu­ally scru­tin­ized be­fore Con­gress takes new ac­tion. The House has taken up only about a half dozen of them so far; most, in­clud­ing the racetrack pro­vi­sion, have not been ac­ted on.

Houser and oth­er of­fi­cials of the ISC — a pub­licly traded Daytona Beach, Fla., com­pany that owns that city’s NAS­CAR racetrack and an­oth­er in Watkins Glen, N.Y., along with 11 oth­er mo­tor­s­ports fa­cil­it­ies — were in Wash­ing­ton last week try­ing to ex­plain why the race­ways pro­vi­sion should not re­main in the path of a le­gis­lat­ive drive to re­think it and dozens of the oth­er tem­por­ary spe­cial-in­terest taxes.

Join­ing them was the Chica­go­land Speed­way and Route 66 Race­way Pres­id­ent Scott Pad­dock.

“There are over 1,200 racetracks in the United States, many of which don’t run NAS­CAR races,” Houser said. There are tracks that host mo­tor­cycle events, drag races, and there are smal­ler, “ma and pa” ven­ues, he said. Spe­cific­ally for ISC, he said, the racetrack pro­vi­sion rep­res­ents a be­ne­fit that could be worth “$10 mil­lion a year,” which al­lows the pur­suit of pro­jects that cre­ate jobs, such as a cur­rent $400 mil­lion renov­a­tion of the Daytona In­ter­na­tion­al Speed­way.

“This isn’t just about NAS­CAR,” he said.

But there are some tricky turns for some who are mak­ing this “big­ger-than-NAS­CAR” ar­gu­ment. For in­stance, the France fam­ily, which owns and op­er­ates NAS­CAR, also con­trols a big fin­an­cial in­terest in the ISC it­self.

The pref­er­ence is that the mo­tor-race­way pro­vi­sion be made per­man­ent, like the breaks for amuse­ments parks, or like a pre­vi­ously tem­por­ary bo­nus de­pre­ci­ation pro­vi­sion for busi­nesses that Con­gress fi­nally made per­man­ent last week.

That was done on the grounds that mak­ing it per­man­ent will help busi­nesses plan more eas­ily for their fu­ture and man­age their fin­ances. The racetrack own­ers and lob­by­ists say their pro­vi­sion would do the same while also touch­ing on eco­nom­ic de­vel­op­ment, job cre­ation, and ad­di­tion­al tax rev­en­ue for loc­al, county, and state gov­ern­ments.

But, for now, they say they are hope­ful that the tax-ex­tender will at least be re­newed again, per­haps this fall.

“There is no mem­ber that has said this is ter­rible, and I want to strike this,” Houser said. “The prob­lem is we run in­to mostly con­ser­vat­ives who just don’t want any ex­tender — they don’t want any tem­por­ary tax pro­vi­sions. It’s just be­ing im­periled along with 50 oth­er pro­vi­sions.”

Law­makers aren’t so sure that will oc­cur.

“That might be taken up later,” said Rep. Erik Paulsen, R-Minn., a mem­ber of the Ways and Means Com­mit­tee, about the mo­tor-race­way pro­vi­sion. But for now, he said, the com­mit­tee is fo­cused more on tax breaks that deal more with job cre­ation and be­ne­fit­ing the eco­nomy.

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