Rose City Archery Inc., an Oregon company that makes arrows used by children, hit a bull’s-eye with Senate legislation that would rescue Wall Street banks.
Senators attached a provision repealing a 39-cent excise tax on wooden arrows designed for children to an historic $700 billion financial-markets rescue that passed tonight by a vote of 74-25. The provision, originally proposed by Oregon senators Ron Wyden and Gordon Smith, will save manufacturers such as Rose City Archery in Myrtle Point, Oregon, about $200,000 a year.
It’s one of dozens of tax breaks benefiting Hollywood producers, stock-car racetrack owners and Virgin Islands rum- makers included in the broader legislation in an effort to win support from House Republicans, whose defection contributed to a rejection of an earlier version of the legislation two days ago on a 228-205 vote.
“This is how Washington works,” said Keith Ashdown, chief investigator at Taxpayers for Common Sense, a Washington research group. “A big pot of pork is their recipe for final passage.”
Representatives for Wyden, a Democrat, and Smith, a Republican, didn’t immediately return calls. Jerry Dishion, president of Rose City Archery, was in meetings and unavailable to comment, a receptionist at the company said.
Most of the provisions are part of a package of provisions known as “extenders” because they are renewed for only a few years at a time.
Research Tax Credit
Popular with lawmakers, the provisions include a research tax credit worth about $8.3 billion a year for companies such as Microsoft Corp. and Harley-Davidson Inc., and subsidies for the overseas financial services earnings of U.S.-based multinational corporations such as General Electric Co. and Citigroup Inc.
The tax package also would spare 24 million American households from a scheduled increase in the alternative minimum tax amounting to $62 billion this year and renew about $17 billion of incentives to promote energy production from renewable sources such as solar and wind.
Other, smaller provisions, such as one that will save Nascar track builders $109 million this year, have been staples of the tax code since 2004 or earlier. They periodically expire and are renewed, and include hundreds of millions of dollars of tax incentives for companies that invest on Indian reservations, in the District of Columbia, and American Samoa. Other breaks would subsidize renovations of restaurant franchises and cut import duties on wool and wood.
Break for Filmmakers
Several others are new provisions, including two tax breaks worth $478 million over the next decade for movie and television producers who shoot films in the United States. The legislation would allow filmmakers to qualify for a 3 percentage-point reduction from the 35 percent top tax rate approved in 2004 for domestic manufacturers.
The arrows provision seeks to reverse an anomaly in a 2004 law that created the 39 cent excise tax on the weapons. Intended the levy more expensive arrows, the tax also applies to arrows used by Boy Scouts and other youth organizations that cost about 30 cents a piece. Ten manufacturers in nine U.S. states stand to benefit from the change, according to a description of the legislation from Wyden’s office.
Michael Steel, a spokesman for House Minority Leader John Boehner, said the inclusion of the tax breaks “will increase the appeal of the package for our members.”
The Congressional Budget Office said today the tax provisions will add about $112 billion to budget deficits over the next five years because the legislation doesn’t contain enough offsetting revenue increases to keep the budget balanced.
The biggest revenue-raising provision in the bill would cost managers of hedge funds about $25 billion over the next decade by prohibiting an accounting technique they currently use to defer for as long as 10 years U.S. taxes on their income earned in foreign countries, usually tax havens such as the Cayman Islands.
Source / Bloomberg
Thanks to Harry Edwards / The Rag Blog