Michael Tanner of the Cato Institute is no fan of a plan to extend dozens of targeted federal tax breaks. He explains why in a column for National Review Online.
There have been few occasions over the past six years when I have found reason to praise President Obama. Rarer still are the times that I have been critical of a proposal to cut taxes. But in threatening to veto the so-called “tax extenders” legislation currently making its way through the lame-duck Congress, the president may be doing the right thing.
As with most bad legislation, the tax-extenders bill has bipartisan support, ranging from Harry Reid on the left to Senator Jim Risch from Idaho on the right. But if this is an example of Congress “getting things done,” we would be better off with more gridlock.
That is not to say that the extenders legislation contains no good ideas. Some portions are valuable, such as making the research-and-experimentation tax credit permanent and continuing an immediate write-off for some types of small-business investment. But most of the legislation is a grab bag of special-interest giveaways.
The “green energy” lobby is a big winner, as usual. For example, the bill would extend the wind-production credit through 2017, at a cost of around $20 billion. Electric cars have long been subsidized by the government, of course, but this legislation would also extend the tax credit for electric motorcycles, three-wheeled vehicles, and low-speed vehicles. There is also the usual collection of tax breaks for the makers of energy-efficient appliances and the builders of environmentally conscious homes. And of course it wouldn’t be a proper piece of special-interest legislation without a tax credit for the producers of cellulosic biofuels — that is, ethanol.
Hollywood also gets a reward, in the form of an extension of special expensing rules for movie and television production. Other winning industries include railroads and NASCAR, which continues to receive its special depreciation rules. Actually, Congress appears to like all types of racing, since the owners of race horses under three years old also get a special depreciation schedule.
And if all this drives you to drink, don’t worry. There’s a provision extending the special tax break for Puerto Rican rum.
