Much has been said about what the fiscal cliff bill – passed among much congressional huffing and puffing and emo legislative drama – will do for the middle class. We all know by now that it will wipe out dreaded tax hikes that would have descended like locusts after the Bush-era tax cuts were supposed to end.
Many American taxpayers weren’t the only ones breathing a sigh of relief Monday after Washington lawmakers finally came to an agreement to avoid the dreaded fiscal cliff.
However the deal was less kind to the middle class. Congress permitted a cut in the payroll tax to expire, meaning that the tax burden for the average worker will increase about $1,000 in 2013.
Tucked inside the last-minute fiscal cliff package were more than a dozen tax loopholes, many of which will benefit Wall Street financial firms and some of the nation’s biggest corporations. These breaks will cost hundreds of billions of dollars in the coming year, underscoring the lobbying power of corporate interests.
The corporate loopholes were part of a package of so-called tax extenders tacked onto the main bill.
NASCAR was also an unlikely beneficiary of the new legislation. The racing series, which is based in Daytona Beach, will receive a $70 million break in the new deal, reports the Auto Week.
Track owners and NASCAR together have spent hundreds of thousands of dollars lobbying for the tax benefit over the past five years, according to lobbying disclosure forms.
The so-called “NASCAR tax credit” allows “certain motorsports racing track facilities” to write off their costs over just seven years, rather than the usual 15 to 39 years. Compacting the write off period allows the tracks to pay fewer taxes over that time. The tax credit is located under section 168(i)(15) of the federal tax code, but you already knew that.
According to estimates by the Joint Committee on Taxation, the so-called NASCAR loophole will cost taxpayers $46 million this year and an additional $95 million through 2017, says the Huff Post.
As a result, a worker who earns $50,000 a year will now pay at least $80 per month in taxes. The payroll tax increase will affect as many as 160 million people.
The Washington Post writes about other interesting tax provisions in the fiscal cliff bill.
Congress currently levies an excise tax worth $13.50 per gallon on all rum produced in or imported to the United States. Most of that money is transferred to Puerto Rico and the Virgin Islands, who use the revenue to support their rum industries. In 2009 $547 million was raised
The fiscal cliff deal has a bunch of provisions for clean energy—notably, it extends a key tax credit for wind power for one more year, thus preventing the U.S. wind industry from downsizing.
Many years Congress has been trying to promote electric cars through various tax breaks and subsidies. Section 403 of the bill extends a credit for “2- or 3-wheeled plug-in electric vehicles.”
The fiscal cliff bill renews “special expensing rules for certain film and television productions,” at a cost of some $75 million per year. Studios in Hollywood and elsewhere can deduct up to $15 million of their costs if more than three-fourths of the movie’s production takes place in the United States.