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Rifle Shots: Tax Breaks Targeted for the Few

May 16, 1996

WASHINGTON (AP) _ The beneficiaries range from Kentucky racehorse owners to Massachusetts fishermen to college football coaches.

They’re in a House tax bill intended to ease the burden on business of raising the minimum wage, but one that also is pockmarked with ``rifle shots″ _ loopholes so small that only a few taxpayers can slip through.

Other provisions help restaurants offering home delivery, passenger ships based in Alaska and Hawaii and small wineries.

The House Ways and Means Committee approved the bill Tuesday on a bipartisan 33-3 vote. It’s headed to the House floor, probably next week, as a sweetener to a $1-an-hour minimum wage increase to be offered by moderate Republicans.

The bulk of the bill, offering $7 billion in breaks through 2003, does indeed go to small businesses generally: $3.6 billion for faster equipment writeoffs, $1.5 billion for pension reforms and $570 million for so-called Subchapter S corporations, a popular method of organizing family-owned businesses.

But more than four dozen narrowly targeted provisions are tacked onto the end of the bill under the heading, ``Technical Corrections.″

Democrats, who complain they weren’t shown the final version of the bill until the night before Tuesday’s session, are protesting what senior Ways and Means Democrat Sam Gibbons of Florida calls ``an aroma factor.″

``I don’t think we’ve yet discovered all the things that may be in there,″ he said. ``It looks terrible. It looks like somebody bought their way into the legislation.″

But Ways and Means Chairman Bill Archer, R-Texas, brushed off the complaint, noting that all of the new breaks were paid for by tightening other tax provisions. And, he said, many date back to Democratic-controlled Congresses. They’ve just never made it into a bill signed into law by the president.

``Only three Democrats voted against this bill,″ he said. ``It clearly has massive bipartisan support.″

And Archer pointed that the provision affecting racehorse owners raises revenue by closing a loophole that opened inadvertently in 1990, allowing horse owners to take a large writeoff in the year they purchase their animals.

However, previous versions of the provision had been retroactive to the date the mistake was made. At the urging of Rep. Jim Bunning, R-Ky., a senior Ways and Means member, the mistake was corrected for the future but not retroactively.

In fact, Bunning argued that the mistake shouldn’t be corrected at all since owners of livestock other than horses, from cows to llamas, get the large first-year writeoff.

Not all of the rifle shots were exclusively Republican.

Rep. Richard Neal, D-Mass., offered one, accepted by the committee on a voice vote, in behalf of non-committee members Reps. Peter Blute, R-Mass., and Barney Frank, D-Mass.

It would help owners of small commercial fishing boats in New Bedford, Mass., by restoring their exemption from payroll withholding for crew members who get paid with a share of the catch.

He had also pushed _ unsuccessfully _ a broader amendment offering a tax deduction for college tuition. He acknowledged, ``There is some irony involved,″ that the narrow amendment passed so easily and the other did not.

But, he said, the fishing boat provision was paid for by tightening tax enforcement in the fishing industry, and ``the truth is you could make a good argument for it.″

Meanwhile, America’s college football coaches will get another shot at preserving their special tax-deferred retirement plan, benefiting about 600 head coaches and assistant coaches.

The coaches argue that many of them have little security because a bad season can leave them without a job. That means they often move on before becoming vested in a college’s pension plan.

The provision would let them continue to make tax-deferred contributions to a retirement plan run by the American Football Coaches Association, in addition to any retirement plan their employers may offer.

But coaches in no other sport enjoy such a benefit. The football coaches have gotten their provision into bills before, but never into law.

This bill also may not make it into law since it’s caught in the crossfire of larger presidential campaign issues such as the minimum wage and suspension of the 1993 increase in the gasoline tax.

But, politically, the exercise still is useful for House members eager to show supporters they’re looking out for their interests, said tax lobbyist Clint Stretch of Deloitte & Touche.

It ``lets members get some credit for having gotten some things done,″ he said. They can tell backers, ``You didn’t get the thing you needed but at least I got it out of Ways and Means for you.″

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