PORK for sale. House Panel Enlists Military Bill In Cause of Business Tax Breaks

[Dave Farber <dave () farber net>]

House Panel Enlists Military Bill In Cause of Business Tax Breaks

By Juliet Eilperin
Washington Post Staff Writer
Wednesday, March 5, 2003; Page A01


Days before the House Ways and Means Committee took up an innocuous military
bill last month, Chairman Bill Thomas (R-Calif.) made an offer to other
Republican committee members at their weekly luncheon: prepare a wish list
of tax breaks under $100 million each, and they could add them to the
measure. 

"It was Mr. Thomas's idea," said panel member Jim McCrery (R-La.), adding
that Democrats declined the same offer. "Everybody in the meeting agreed
there were a lot of little tax items we had not [been able to enact] the
last couple of years. This was something that was going to move."

For a small cadre of local companies and one trade association, this was the
equivalent of the lobbying mother lode. After years of trying, they would
finally have their priorities added to a bill likely to become law -- even
if there were no guarantees that their amendments would remain intact
throughout the legislative process.

The first test will come Thursday when the full House will take up the bill,
which was designed to extend several tax benefits to members of the
military. If the House accepts the committee's version, and it survives an
eventual conference committee with senators, then racetrack owners and horse
breeders would have an easier time enticing foreigners to bet on their
races; an alternative type of diesel fuel would get a tax break, and
U.S.-made bows and arrows would sell for less.

Some Democrats have reacted angrily, saying it is wrong to push special tax
breaks just as the nation prepares for war in Iraq and the federal deficit
continues to soar. Rep. Martin Frost (Tex.) said he and other Democrats hope
to strip the provisions from the bill Thursday. "We don't have to be adding
to that deficit, particularly with things that are unrelated to our troops."

Rep. Charles B. Rangel (N.Y.), the committee's top Democrat, concurred.
"While some Republicans say we cannot afford more money for states, public
schools and homeland security, they have no problem spending hundreds of
millions on these pet provisions," he said. "In normal times, that's
hypocritical. In a time of war, that's shameful."

In an interview after the committee vote, Thomas noted that the bill has
been changed a few times through the process.

"It's a matter of degrees," he said, adding that the GOP amendments were
justified on policy grounds. "At what point do you say the degrees were too
far?"

The amendments, which added more than $300 million in tax breaks to the
bill, prove that patient and dogged advocates can get their proposals
translated into legislation over time. Marrying a broad policy pitch with an
appeal to members' parochial interests, these groups managed to slip their
desired tax cuts into the previously little-noticed bill.

The National Thoroughbred Racing Association teamed up with the American
Horse Council and American Quarterhorse Association several years ago to
convince McCrery and other lawmakers that the United States should eliminate
a 30 percent tax for foreigners who bet on American horse races.

Tim Smith, the thoroughbred association's commissioner, estimated that $700
million a year is wagered in Canada on U.S. races. If the 30 percent tax
were eliminated, advocates say, many of those bets would be included in the
broader U.S. betting pool. "It would almost certainly increase foreign
wagering on U.S. horse racing," Smith said. "It would boost both the
entertainment side of our business and the agribusiness side."

If a Canadian bets in Canada on a U.S. horse race and wins, he gets to keep
all the winnings. Canadian racetracks pay U.S. tracks 3 percent of the money
wagered north of the border -- about $21 million a year -- for the right to
show U.S. races. Under the McCrery plan, Canadians' bets would be commingled
with the larger U.S. pool and the winnings would be divided accordingly.
Canadians would not have to pay U.S. taxes, but the track owners and
breeders would reap the benefits of bigger business.

The groups had a key ally in a college friend of McCrery's named J.D.
Blondin, a past president of the quarterhorse association who now sits on
the Louisiana State Racing Commission. The thoroughbred association hired
the Washington firm of O'Brien Calio, now named the OB-C Group, to make its
case in Congress. The association also gave liberally to congressional
candidates in 2001-02. It funneled $75,000 to the National Republican
Congressional Committee, $50,000 to the National Republican Senatorial
Committee and $15,000 to the Democratic Congressional Campaign Committee.

"Obviously, knowing J.D., I would listen to him," McCrery said, adding that
he usually turns down his friends' legislative requests but decided this one
was worthy. Under the current system, he said, "there's no money coming in
because nobody's stupid enough to place a bet in our betting pools, knowing
they have to give away 30 percent of their money."

The proposed tax break would cost the Treasury almost nothing, Smith said,
because so few foreigners now bet in America.

Rep. Gerald C. Weller (R-Ill.), by contrast, offered a measure that is aimed
at makers of fishing tackle boxes and carries an estimated cost of $30
million over the next decade. The beneficiary? Plano Molding Co., an
Illinois company based just outside Weller's district that has been lobbying
the issue for more than four years.

"It's been one of those things that's been out there . . . for years and
we've had trouble getting it across the finish line," Weller spokesman Ben
Fallon said. He noted that if consumers chose to put their fishing gear in
sewing kits, they would not have to pay the 10 percent excise tax that
applies to tackle box purchases.

Lubrizol Corp. was another winner; the committee voted to lower taxes on the
company's brand of fuel, composed of diesel and water. Located just outside
GOP Rep. Rob Portman's district in Wickliffe, Ohio, the company produces an
environmentally friendly fuel that includes 20 percent water.

Lowering the excise tax from 24.3 cents to 19.7 cents per gallon would
provide "an incentive" for consumers to buy Lubrizol's product, Portman
spokesman Jim Morrell said.

Kevin Snape, the company's manager of economic policy and regulatory
affairs, said the company simply wanted to pay taxes only on the diesel
portion of the fuel, since the tax is geared toward diesel products. Portman
was a natural ally.

"He's the Ohio seat of the Ways and Means Committee; it's really that
simple," Snape said. "It took him about half a second to figure this one
out."

The House is expected to pass the military bill this week, and then may face
reconciling its version with a Senate measure that does not include the
added tax breaks. McCrery, pushing his racing amendment, said: "I'm
optimistic this will make it into law at some point, because it makes too
much sense. Whether it's going to make it into law on this bill, I don't
know."

-------------------------------------
You are subscribed as interesting-people () lists elistx com
To manage your subscription, go to
  http://v2.listbox.com/member/?listname=ip

Archives at: http://www.interesting-people.org/archives/interesting-people/