New tax law packed with breaks for businesses

Friday, January 4, 2013

WASHINGTON (AP) — Tucked into the “fiscal cliff” tax package approved by Congress are billions of dollars in tax breaks that should make the new year a lot happier for businesses of many stripes, including film producers, race track owners and the makers of electric motorcycles.

In all, more than 50 temporary tax breaks were renewed through 2013, saving businesses and individuals about $76 billion. Congress routinely renews the tax package, attracting intense lobbying — and campaign donations — from businesses and trade groups that say the tax breaks help them prosper and create jobs.

Businesses have grown used to many of the longstanding tax breaks, but they also have had to get used to the uncertainty of whether they will be renewed each year. This time around, as lawmakers struggled to reach consensus on a wide range of tax issues, the tax breaks were allowed to expire at the end of 2011.

The package passed by Congress this week and signed by President Barack Obama renews the tax breaks retroactively, so taxpayers can claim them on both their 2012 and 2013 tax returns.

The biggest of the bunch, a tax credit for research and development, helps U.S. manufacturers compete against foreign competition, according to the National Association of Manufacturers. Another provision helps restaurants and retailers expand by allowing them to more quickly write off the costs, according to the National Restaurant Association.

These provisions have widespread support in Congress; others are more obscure.

For example, there is a tax credit for producing electricity from wind mills, a tax credit for buying electric-powered motorcycles, and tax rebates to Puerto Rico and the Virgin Islands from a tax on rum imported into the United States.

Sen. John McCain, R-Ariz., said the package is filled with “special-interest handouts” that make it difficult for him to justify his vote in favor of it.

“It’s hard to think of anything that could feed the cynicism of the American people more than larding up must-pass emergency legislation with giveaways to special interests and campaign contributors,” McCain said.

Lawmakers are wary of making the tax breaks permanent because of the cost, even though they inevitably renew almost all of them each year. Annual angst over whether the tax breaks will be renewed also provides incentives for businesses to lobby key lawmakers.

“All these provisions have a lobbying arm behind them, for the most part,” said Mark Luscombe, principal tax analyst for CCH, a consulting firm based in Riverwoods, Ill. “If they only extend them for a year or two then the lobbyists have to keep coming back and bestowing their favors on congressmen to get the thing extended again. If they made it permanent, then the lobbyists would go away.”

Among the provisions in the new law are:

• A tax credit for research and development, benefiting a wide range of industries, including manufacturers, pharmaceutical companies and high tech companies. Cost: $14.3 billion.

• An exemption that allows banks, insurance companies and other financial firms to shield foreign profits from being taxed by the U.S. The tax break is important to major multinational banks and financial firms. Cost: $11.2 billion.

• A tax break that allows profitable companies to write off large capital expenditures immediately — rather than over time — giving some companies huge tax shelters. The tax break, known as bonus depreciation, benefits automakers, utilities and heavy equipment makers. Cost: $5 billion.

• A tax credit for the production of wind, solar and other renewable energy. Cost: $12.2 billion.

• A provision that allows restaurants and retail stores to more quickly write off the cost of improvements. Cost: $3.7 billion.

• Increased tax rebates to Puerto Rico and the Virgin Islands from a tax on rum imported into the United States. The U.S. imposes a $13.50 per proof-gallon tax on imported rum, and sends most of the proceeds to the two U.S. territories. Cost: $222 million.

• Extends a 50 percent tax credit for expenses related to railroad track maintenance through 2013. Cost $331 million.

• A provision that allows motorsport race tracks to more quickly write off improvement costs. Cost: $78 million.

• Enhanced deductions for companies that donate food to the needy, books to public schools or computers to public libraries. Cost: $314 million.

• A tax break that allows TV and movie productions to more quickly write off expenses. Sexually explicit productions are ineligible. Cost: $248 million.

• A tax credit of up to $2,500 for buying electric-powered vehicles was expanded to include electric-powered motorcycles. Golf carts, however, were excluded. Cost: $7 million. Sen. Ron Wyden, D-Ore., took credit for this tax break, saying it would help Oregon-based Brammo, which manufactures electric motorcycles.

“The electric motorcycle industry is poised to create tens of thousands of U.S. jobs over the next five years, led by companies like Oregon’s Brammo,” Wyden said. “This amendment helps promote the development of a promising U.S. industry and support the transition to a low-carbon American economy.”

More like this story

RobHunterJohnson 4 months, 3 weeks ago

Why don't we do away with lobbiest's?> Rob

JCLifer 4 months, 2 weeks ago

You really want the legislators to walk away from all that $$ and gifts, and nice vacations that lobbiests provide them? You are a mean person!

connor 4 months, 3 weeks ago

Do away with lobbiest and campaign contributions, both union and corporation.

And the Forum is still borked for a "few" it seems..... Moderator?....Crickets? Been that way for days.

Littleinvestor 4 months, 2 weeks ago

Rob, we have a constitutional right to petition the government under the First Amendment. Most of us don't do that personally. Many of us do it through business associations, unions and other groups. I guarantee your union has lobbyists. What needs to change are the laws governing how lobbyists and elected officials interact and I think every last dime a politician receives into their election fund ought to be reported publicly and the giver identified. Too many loopholes allow what amounts to bribery at the federal and state level. That does not mean all lobbyists are bribing officials, or that all officials accept bribes, but it appears to be widespread enough to be the biggest problem threatening our representative government.

asb 4 months, 2 weeks ago

bingo!

spelchek 4 months, 2 weeks ago

Sticking it to the "rich" indeed. Meanwhile, proportionally the middle class will see their paychecks shrink more than those making $500K. "Forward".

RobHunterJohnson 4 months, 2 weeks ago

The 112th, barely let the ink dry on the paper before they added all the pork, as I said the do nothing 112th congress is history, LETS GET RID OF LOBBIEST! The banking industry needs no breaks, even at the smallest of banks, cannot even figure when they are being embezelled from? Lets go racing needs no help, nor the Rum runners of the Virgin Islands, or Porta Rico! All these wormy politicians are the problem, and Lobbiest's! Rob

JCLifer 4 months, 2 weeks ago

We got a Fiscal Cliff deal that ends up being 620 billion dollars in tax hikes and 15 billion dollars in spending cuts. Just like you said Mr. President, "A Balanced Approach". What a JOKE, and not a funny one, either.

PatsyDecline 4 months, 2 weeks ago

My comment reposted from an article from yesterday.....fwiw....

Isn't the only question that really matters at this point is what does the Fed banksters want?

I don't think either party has any plan for anything other than to keep cashing the checks of the banksters that own them.

I'm no fancy economist....but there are only two real scenarios as I see it.

Either the banksters do everything in their power to continue to kick the can as long as possible to prevent the the death spiral of rising interest rates....a slow bleed to misery.

Or a massive bond "crisis" is manufactured that spikes interest rates, shreds the economy, and destroys the working class once and for all....allowing for the coup de' grace of asset transfers from the people to the banksters....all under the political guise of saving the currency....ahhh I do a love a nice poem.

If you were a member of the bankster scum class which would pick?

Neither political party in their present form have any real answer.....nor seriously wish to find one.

As such neither party is worth a bucket of warm spit at this point other than show and tell ponies for the MSM to fawn over.

Possible Solutions??

How about banning all forms of lobbying? How about banning all corporate/nonprofit/527/etc political contributions? How about limiting individual private political contributions to $100 maximum?

I don't see anything changing until we wrest control back from the corporate/bankster leeches that presently own our government. Until I see that happen....heck....even BEGIN to happen....I'm completely done believing or supporting either party.

Am I big money donor that matters to them? Nah....just a blip in their database of suckers....but this sucker is Done.

A rather delicious irony.....for some I guess....LOL!

Since the payroll tax going back to 4% from 2% only effects income <113K....take a guess which households that come out the BEST of all in this lastest fiscal cliff/garbage???

Households making $200K - $400K. LOLOLOLOLOLOL

Good thing Obama and his Dems are looking out for the working man. LOLOLOLOLOLOL

Happy New Year!

Littleinvestor 4 months, 2 weeks ago

Patsy, you have some good ideas but the U.S. Supreme Court already ruled that money is speech and speech is unlimited. And, Oh, corporations are people too.

RobHunterJohnson 4 months, 2 weeks ago

Little Investor, All we need to do is add up the top 5 which the AP so kindly gave us, and we could get rid of 46.4 billion dollars! I just turned off my FOX channel, and the complaint is we need another 600 Billion in cuts? Why did the Rebuplican led congress allow them to load an emergency bill with PORK? LOBBIEST! These politicians load themselves at the LOBBY table, Democrat, or Republican! If the Tea Party wants to curtail spending take a look around there is plenty of waste , They too are corrupted by LOBBIEST, and the tea party types seem to be more focused on SS, MEDICARE? One can only wonder why? I have to ask Little Investor are you a lobbiest? I have not recieved anything from my constitutional right of lobbying, and by no means any MONEY! The way to get out of this pickel we are in is once again, bring the jobs back home, raise taxes, (it hurts just like paying off the revolving credit accounts), and cut SPENDING. The biggest waste I have seen is DIABETIC TENNIS SHOES! Starting at $500.00 a pair? Rob

yamahamian 4 months, 2 weeks ago

Rob - do the unions employ lobbyists? Just wondering...

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