I love horses. But you know that there is something wrong with the federal government when horses get better treatment than the average American taxpayer. Yes, you read that right: horses. Sen. Jeff Merkley, a freshman Democrat from Oregon, trekked to the Senate floor to expose and denounce a special federal tax giveaway for thoroughbred racehorses.
This "Bluegrass Boondoggle," Merkley notes, allows millionaire and billionaire racehorse owners to write off the cost of their horses in an accelerated manner, reducing the normal seven-year period for write-off to just three years. This one goodie for the special interests will end up costing U.S. taxpayers, over the course of the coming years, $126 million. “Horse racing may have been called the ‘sport of kings,’ but that doesn’t mean that the owners of horses, those millionaires and billionaires owning those horses, need royal tax treatment,” the senator wisely points out. Merkley's also correct that saving $126 million alone won't solve the deficit problem.
The truth is, though, that the Bluegrass Boondoggle isn't unique. There are some 180 special tax giveaways just like it, according to former senator Alan Simpson, a conservative Republican from Wyoming. For his fellow Republicans to be protecting them now against repeal in the face of deficit-reduction is "ludicrous," he says. "They‘re spending by any other name. They‘re really earmarks if you want to use that terrible word," Simpson admits.
You can call them something else, too: welfare for the wealthy. Simpson, who also co-chaired President Obama's bipartisan deficit commission, found that only 10 percent of the American public, the wealthiest people in America, use these special loopholes because, he says, "they‘re the ones who can hire the best lobbyists, go to the finance committee. The little guy had no idea of what they are. It meant nothing to him," the former senator adds. "He does the standard deduction and walks away. We found the top 400 income earners in the United States paid an average of 16 percent income tax. And it‘s absolutely absurd."