The Chinese Year of The Horse started with the usual dragon dances, parades and fireworks –and the most expensive taxpayer farm bill that continues to benefit corporate farmers and the polo playing and jumping horse set. Having been a horse owner who capitalized on the tax benefits bestowed on horse owners, I think it is time to review the galloping horse benefits the horsy set receive.
The original idea behind the tax deduction for keeping a horse was that horses were essential to the functioning of a farm, like pigs and cattle. Although that is no longer true for most of the horses in this country, this deduction has been expanded into a major tax shelter.
If you own a horse, you can deduct the costs of food, housing, vet bills, stud fees, transportation, insurance, interest charges, depreciation, attendance at horse shows, visits to horse farms, and state and local taxes.
Wilhelmina du Pont Ross, a member of one of the wealthiest families in the world, hired her husband to run their stables and wrote off his salary on their joint tax return. Her relative, William du Pont, Jr., whose vast estate in Maryland contained a grandstand that could seat 12,500 people, deducted the cost of keeping professional foxhunters on staff.
You can trade an older horse for a younger and more valuable one without paying taxes on the exchange. And when you sell a horse, any profit is taxed at the lower capital gains rate, rather than as ordinary income. If you don’t want the bother of actually owning a horse, leasing programs allow you to cash in on the tax advantages without any unpleasant odors on the estate.
All of this is kept in place by the vigorous lobbying of the American Horse Council, whose representatives virtually write the laws in this area. There isn’t much opposition to these loopholes because most people don’t know about them and, well, everybody loves horses.
Welfare for the rich fosters corruption, in business and in government. If anyone doubts that, just look at the Enron congressional investigations. This is a tradition that goes back to the railroad subsidies of 1870s when America became the continental power it did by subsidizing the railroad barons of the time at the expense of the public taxpayers. And it’s not uncommon for two “wealthfare” programs to conflict – as when the Interior Department subsidizes irrigation water for agribusiness and the Agriculture Department pays those same companies not to grow crops with that water. What do the companies do? Why, they sell the water back to local governments at a profit, of course. Something drought-hit states, make that all 50 states, ought to re-consider together with the golden horse benefits the horsy set receive from taxpayers.
Happy, Healthy and Prosperous Year of The Horse!