Some Connecticut companies get breaks in fiscal cliff deal
Washington — While lawmakers championed the fiscal cliff deal as the mechanism that keep taxes on the middle class from rising, they also, more quietly, approved special tax breaks that will benefit several Connecticut businesses.
The tax breaks range from credits to rum makers like Diageo to research and development write-offs for large companies like United Technologies.
They all expired at the end of 2011. Now they can be used retroactively for companies’ 2012 taxes and again when they file their 2013 taxes next year. They will cost more than $63 billion this year, according to an analysis by the Joint Committee on Taxation.
Taxpayers for Common Sense identified “Top 10 Fiscal Cliff Tax Fails” among the so-called extenders attached to the legislation Congress approved on New Year’s Day.
In a report, the anti-spending group said Congress approved the tax extenders “without any real debate to determine if they are the best way to spur the economy or meet other goals.”
“These provisions are known to latch themselves onto must-pass legislation; last hitching a ride on the deal to extend the Bush tax cuts in 2010,” the report said.
One provision allows immediate expensing of up to $15 million of the production costs of a movie — or television show — produced in the United States. The tax break was supported by the Motion Picture Association, which is headed by former Sen. Chris Dodd, D-Conn.
According to the Joint Committee on Taxation, Hollywood and the television industry will save about $266 million in taxes this year because of the provision.
Another tax break benefits rum importers Diagio and Bacardi, companies that distill their rum in the U.S. Virgin Islands and Puerto Rico. The tax break allows the spirit companies a reimbursement of $13.25 for every $13.50-per-gallon they pay in excise taxes to import their rum.
According to the Taxpayer for Common Sense report, the U.S. Virgin Islands is leveraging that tax break to back bonds used to build a new distillery for Diageo, a huge British-based liquor conglomerate whose U.S. operations are based in Norwalk.
The cost of this tax break to taxpayers will be about $200 million this year, according to the Joint Committee on Taxation. Diagio did not return requests for comment.
A research and development tax break that benefits large corporations has also been extended. United Technologies is among the companies that have benefited from it, which will cost the U.S. Treasury about $6.3 billion this year.
“Because of our signinficant research and development efforts in the United States, we have benefitted from this tax credit,” said John Moran, spokesman for United Technologties.
Moran, however, declined to say how much in taxes it saved from this measure in the company’s last tax federal tax filings.
There are also tax breaks in the fiscal cliff bill for railroad tracks and NASCAR racing tracks. Another increases the amount of property a small businesses can depreciate on an accelerated basis.
And residents of Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming who don’t pay state income taxes will be able to continue to deduct all the sales taxes they pay.
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