Tax breaks for racing track owners included in fiscal cliff deal
By Cindy Wojdyla Cain ccain@stmedianetwork.com January 7, 2013 10:44PM
An aerial photo of the Chicagoland Speedway Saturday, Sept. 17, 2011, in Joliet. | File photo
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Updated: February 9, 2013 6:14AM
The fiscal cliff deal Congress passed last week extended a tax break for racetrack owners, including the company that owns Chicagoland Speedway and Route 66 Raceway in Joliet.
The racetrack tax advantage, combined with similar tax breaks for other industries, are estimated to cost the federal government
$76 billion. At a time when the federal deficit is soaring, that notion has upset some.
“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,” U.S. Sen. John McCain, R-Ariz., said last week.
Still, lawmakers renewed more than 50 temporary tax breaks through 2013 as part of the fiscal cliff legislation. The price tag on the tax break for racetracks, which essentially allows them to write off their investments more swiftly, is about $78 million.
Charles Talbert, a spokesman for Daytona Beach, Fla.-based International Speedway Corp. (ISC), which owns 13 tracks, including the two in Joliet, said the tax break has been in existence since the 1970s. It allows owners of all motorsports venues, not just NASCAR tracks, to deduct investments in their facilities over seven years rather than the normal 15, he said.
“You’re not paying less tax,” he said.
Racetrack companies pay the same amount of taxes over the 15 years, but they pay less in the early years and more later, he said.
“This is a longstanding way we’ve done business,” he said. “This is private industry creating jobs.”
Originally, racetrack owners started taking the deduction under an amusement park tax code, because the tracks fit the definition, Talbert said. Congress created a motorsport category in 2004, when the IRS started scrutinizing the deduction in a less favorable way, but it wasn’t permanent and it has been extended in bills ever since, he said.
“We believe it should be made permanent,” he said.
Most racetracks are privately funded, in contrast to professional football and baseball teams which get more public support for stadiums and other improvements, he said.
“We don’t get that (public support),” Talbert said. “It’s on our nickel having to upgrade these facilities.”
ISC invested $90 million in its 13 tracks last year, he said. Talbert declined to say how much the companies invested locally last year.
“We make a lot of investments that don’t necessarily generate a return,” he said.
But some of the investments do boost revenue, which ultimately creates more tax revenue for the government and jobs for the economy, he said.
City Manager Tom Thanas said while Joliet reaps property tax, sales tax and job creation benefits from ISC’s two tracks, the company receives no local tax breaks. If a federal tax break helps keep racetrack companies strong, that’s good for local economies, Thanas added. There’s another advantage that’s harder to quantify but also valuable, he said.
“It’s a combination of not only the revenue stream, but the prestige of having the racetracks in our community,” he said.
Chicagoland Speedway features a paved, 1.5-mile oval track that hosts NASCAR events, and Route 66 Raceway includes a .25-mile stadium-style drag strip and a .50-mile dirt oval track.
Before the recession, there was talk of expanding seating at Chicagoland Speedway, but the plan never materialized once attendance dropped during the worst years of the downturn. Attendance rebounded last year.
ISC, which also owns Daytona International Speedway, reported total revenues of $422.9 million for the first three quarters of 2012, compared to $437.7 million in 2011. Net profits were $29.8 million for the same time period, down from $42.9 from 2011.
The fiscal cliff legislation also helps manufacturers, pharmaceutical companies and high tech companies receive tax credits for research and development. Other breaks assist the film industry, restaurants, retailers and rum importers in Puerto Rico and the Virgin Islands.
The tax breaks expired at the end of 2011, but with the approval of the legislation, the tax breaks can be claimed on 2012 and 2013 tax returns.
Contributing:
The Associated Press
