While most people were worried about how last minute fiscal cliff legislation would affect their paychecks, owners of race tracks around the country were watching to see whether a temporary tax incentive would be renewed. It was.
Unlike football and baseball stadiums which usually receive public funding, building a new auto race track requires private investment. As an incentive for building these tracks around the country, speedway owners are able to deduct investments in their facilities over seven years, rather than the 15 years required for most facility investments.
This has caused a lot of consternation in the weeks since the deal was passed in Congress. Racetracks will be able to write off approximately $78 million in investments more quickly. At a time when deficits are at all time highs, this seems almost criminal.
Track owners insist that this is not a new credit. Owners have been taking the faster deduction for decades, first under an amusement park tax code and now under a specific motorsport tax credit that was added in 2004. They insist that they still pay the same amount of taxes, just on a different schedule than other owners of commercial property. Instead of paying even taxes over 15 years for new buildings or improvements/expansions of existing property, they pay lower rates for the first seven years and higher rates for the remaining eight.
In addition, while the tracks receive a break in their federal taxes, they still contribute to their local economies by paying property taxes and sales tax as well as generating jobs and attracting tourists who want to watch racers like Scott Tucker and Dale Earnhardt Jr compete.
Just as new stadiums for football and baseball have invigorated cities and neighborhoods around the country, the increased audience for motorsports is making the building of racetracks an important part of revitalization and expansion plans for numerous communities. Making this tax break permanent would be a good incentive for track owners to improve existing tracks and consider investing in new ones.