Rescue Plan Hits Bull's-Eye for Kids' Arrow-Makers (Update2)
By Ryan J. Donmoyer
Oct. 2 (Bloomberg) --
Rose City Archery Inc., an Oregon company that makes arrows used by children, hit a bull's-eye with the Senate's approval of a measure that would rescue Wall Street banks.
A
provision repealing a 39-cent excise tax on wooden arrows designed for children was attached to an historic $700 billion financial-markets rescue that passed last night by a vote of 74- 25. The provision, reported earlier on the Web site
Dealbreaker, was originally proposed by Oregon senators Ron Wyden and Gordon Smith. It will save manufacturers such as Rose City Archery in Myrtle Point, Oregon, about $200,000 a year.
It's one of dozens of tax breaks benefiting Hollywood producers, stock-car racetrack owners and Virgin Islands rum- makers included in the broader legislation in an effort to win support from House Republicans, whose defection contributed to a rejection of an earlier version of the legislation earlier this week on a 228-205 vote.
``This is how Washington works,'' said
Keith Ashdown, chief investigator at Taxpayers for Common Sense, a Washington research group. ``A big
pot of pork is their recipe for final passage.''
Representatives for Wyden, a Democrat, and Smith, a Republican, didn't immediately return calls seeking comment. Wyden voted against the bailout measure last night and Smith voted for it. Jerry Dishion, president of Rose City Archery, was in meetings and unavailable to comment, a receptionist at the company said.
`Extenders'
Most of the provisions are part of a package of measures known as ``extenders'' because they are renewed for only a few years at a time.
Popular with lawmakers, the provisions include a research tax credit worth about $8.3 billion a year for companies such as Microsoft Corp. and
Harley-Davidson Inc., and subsidies for the overseas financial services earnings of U.S.-based multinational corporations such as
General Electric Co. and Citigroup Inc.
The tax package also would spare 24 million American households from a scheduled increase in the alternative minimum tax amounting to $62 billion this year and renew about $17 billion of incentives to promote energy production from renewable sources such as solar and wind.
Nascar Tracks
Other, smaller provisions, such as one that will save
Nascar track builders $109 million this year, have been staples of the tax code since 2004 or earlier. They periodically expire and are renewed, and include hundreds of millions of dollars of tax incentives for companies that invest on Indian reservations, in the District of Columbia, and American Samoa. Other breaks would subsidize renovations of restaurant franchises and cut import duties on wool and wood.
Several others are new provisions, including two tax breaks worth $478 million over the next decade for movie and television producers who shoot films in the United States. The legislation would allow filmmakers to qualify for a 3 percentage-point reduction from the 35 percent top tax rate approved in 2004 for domestic manufacturers.
The package also renews a $33 million break for companies that invest in American Samoa, a benefit targeted at tuna canners such as
Del Monte Foods Co., which owns the Star-Kist tuna brand, and is based in House Speaker
Nancy Pelosi's San Francisco district.
Boy Scout Arrows
The arrows provision seeks to reverse an anomaly in a 2004 law that created the 39 cent excise tax on the weapons. Intended for more expensive arrows, the tax also applies to arrows used by Boy Scouts and other youth organizations that cost about 30 cents a piece. Ten manufacturers in nine U.S. states stand to benefit from the change, according to a description of the legislation from Wyden's office.
Michael Steel, a spokesman for House Minority Leader
John Boehner, said the inclusion of the tax breaks ``will increase the appeal of the package for our members.''
The Congressional Budget Office said yesterday the tax provisions will add about $112 billion to budget deficits over the next five years because the legislation doesn't contain enough offsetting revenue increases to keep the budget balanced.
The biggest revenue-raising provision in the bill would cost managers of hedge funds about $25 billion over the next decade by prohibiting an accounting technique they currently use to defer for as long as 10 years U.S. taxes on their income earned in foreign countries, usually tax havens such as the Cayman Islands.
To contact the reporters on this story:
Ryan J. Donmoyer in Washington at
rdonmoyer@bloomberg.net Last Updated: October 2, 2008 13:59 EDT
Ah Europe.
