CoTA and the Fiscal Deal
Over the holiday break, Credit Slips went on an unplanned hiatus. "Unplanned" could just be implied because most everything that happens here is unplanned. Between everyone's travels, nothing got posted in between Christmas and New Year's. I hope the new year is starting off well for all of our our readers. Although off topic, I thought I would start off 2013 by achieving an important goal of my own, which is to finally work Formula 1 into one of my posts.
Last night's fiscal deal predictably included a number of special-interest tax breaks. The one that caught my attention has been dubbed the "Nascar tax break" by the media. Instead of a long depreciation period of 15 to 39 years, a "motorsports entertainment complex" has been eligible for accelerated depreciation over seven years (26 U.S.C. 168(k)(1)). By accelerating depreciation, the owners of a race track getting bigger tax deductions more quickly instead of smaller deductions spread out over a longer period of time. This particular tax break had been available for any race track placed into service before December 31, 2011, but the fiscal cliff deal extended that date through December 31, 2013.
Thus, the extension of the tax break will benefit any race track that went into service during 2012 or will go into service during 2013. Being a person who watches way too much auto racing, I believe that describes one and exactly only one facility -- the new Circuit of the Americas in Austin, Texas, known as "CoTA" in racing circles. In November, CoTA hosted not Nascar, but the return of Formula 1 to the United States as evidenced by this picture we took from our seats in Turn 5. For the uninitiated, that is Kimi Raikkonen driving a Lotus. Also, if you are like most every other friend of mine in the U.S., the next question will be "Isn't Formula 1 the same thing as Nascar?" The answer is "no." To understand the differences, either rent Talladega Nights: The Ballad of Ricky Bobby and or check out this chart put together by Red Bull (the sponsor of the current F1 champions).
On top of whatever lobbying that went into creating this tax break, there was some fantastic marketing. A "Nascar tax break" almost sounds patriotic, conjuring up images of Bud Light swilling Americans watching cars turn left instead of the Stella Artois chugging Europeans who had the seats behind me for the race. That is not a exaggerated characterization or intended as a criticism from the Guiness-chugging American seated in front of them.
I am getting too old to feign surprise or outrage at special-interest tax breaks in a last-minute fiscal deal. In any event, this one has the promise of keeping the lid on on ticket prices for something I enjoy, so it is OK. My kids can pay for it. May you all enjoy similar blessings. Tax not you, tax not me, tax that man behind the tree.
UPDATE (1/4): The New York Times has just posted a detailed story on this tax break. Senator Debbie Stabenow apparently played a key role in getting the tax break through Congress. There will be some benefits to Nascar tracks that put into place new capital improvements, and the International Speedway Corporation is quoted as saying it will carry out a "robust capital spending plan." Although CoTA still stands to be a major beneficiary of this tax break, there will be some benefit to Nascar.