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.
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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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