Like most pieces of legislation, last week’s historic bill avoiding the budgetary fiscal cliff has more substance to it than you read in the headlines. The bill, which was passed at the last possible moment and signed into law almost immediately, raised taxes for somebut also granted continuation of some hefty tax benefits for certain business groups, ranging from NASCAR track owners to rum producers in Puerto Rico to asparagus farmers.
Theindustry will also enjoy direct and indirect benefits from the bill. As the U.S. Travel Association pointed out in its assessment of the new law, its greatest significance is what the legislation didn’t do, i.e., tackle the issue of sequestration, or the mandatory slashing of the federal budget. If Congress can’t solve that issue in the coming months, the hotel industry could face a major slowdown as government travel would most likely be curtailed with the ripple effect on travel by companies that do business for and with the government.
Hotel owners and operators will most benefit from two provisions of the law. One reauthorizes a tax credit businesses can claim for hiring disabled and disadvantaged workers as well as young people and veterans. Another significant part of the bill renews the so-call bonus depreciation, which allows hoteliers to deduct capital equipment purchases (within limits) immediately rather than over time.
There’s a certain amount of irony to these pork-barrel provisions. A Facebook discussion in which I participated last week bemoaned these special tax “giveaways” for certain industries. And while many, if not most, people show concern for the nation’s looming debt crisis, these same people—especially if they’re businesspeople—seem to take exception to their outrage when the pork is flowing their way.
Of course, this will never change until real, comprehensive tax reform is implemented in such a way that all taxpaying individuals and businesses small and large are subject to the same tax rules, with no special pork for any particular industries. Who thinks that will ever happen? Not me.