Tax laws were good to the International Speedway in 2015. The company released its annual report this week, which reveals it’s just as fine a purveyor of tax dodging as it is race car driving. The company reports earning $73 million in U.S. pretax income in 2015, a handsome profit on which it did not pay a dime of federal or state income taxes. In fact, the company got an $8 million federal tax rebate in 2015.
This tax avoidance is partly enabled by an obscure tax break for “motorsports entertainment complexes.” The provision quietly expired at the end of 2014, but Congress revived it in December as part of its multi-billion dollar tax extenders package.
It’s likely that few Americans realized that the much-maligned “NASCAR tax break” for a brief period was no more. This shouldn’t be surprising, since relatively few of us have the wherewithal to build a racetrack in our backyards. But, as we’ve noted previously, for the handful of corporations that own and maintain racetrack properties, the “NASCAR” break has been a tax-cutting bonanza. Two leading beneficiaries of this tax break, International Speedway and Speedway Motorsports, have paid federal tax rates averaging 11 percent and 7 percent, respectively, over five years.
2015 could have been the year when that all changed: the NASCAR tax break was one of dozens of temporary “extender” tax breaks that expired at the end of 2014. But faced with a rare situation in which inaction is the best course of action, Congress decided instead to bring the extenders back to life in the waning days of its 2015 session, and in doing so extended the NASCAR tax break for another two years.
In the context of our growing budget deficits, the annual cost of the NASCAR giveaway is a drop in the bucket at less than $20 million, making it a small part of the $680 billion extenders package. But because its benefits are narrowly focused on a few privileged companies, the damaging effects of this tax break go way beyond its fiscal cost. The prospect of well-heeled corporate lobbyists driving their employers’ tax rates to zero is exactly the sort of thing that makes Americans lose faith in their leaders, and in government more generally. For those scratching their heads at the rise of presidential candidates whose popularity appears to be driven by anger and resentment, look no further than tax breaks like this one.