Ky. Derby Horse Owners Must Love The Farm Bill

Sen. Mitch McConnell is headed to his old Kentucky home this weekend to enjoy the spectacle of the Kentucky Derby at Churchill Downs, and he's thrown his support behind Colonel John, a 4-1 favorite named after an Iraq war veteran.

But even if the senator doesn't back the right horse at the Derby tomorrow, he's reached the winner's circle with a multi-million dollar tax break for the horse racing industry in the final version of the farm bill.

McConnell, along with a handful of other senators, has successfully spared a measure that would allow accelerated depreciation for race horses. The measure would essentially allow race horse owners _ who pay millions for Triple Crown contenders, write down their investment over three years. The provision appears to have survived the conference committee negotiations on the $300 billion farm bill.

The Joint Committee on Taxation has yet to release an official estimate for the horse race provision, which is part of a larger $1.4 billion tax package.

Defenders of the measure say the tax break simply allows race horse owners to depreciate their thoroughbred assets on the same schedule that farmers depreciate other equipment on their tax returns. Under current law, race horses are depreciated over seven years; the new provision would allow full depreciation over three years. Critics, like House Agriculture Chairman Colin Peterson (D-Minn.), have said they're worried about the provision helping wealthy Saudi princes who buy Triple Crown horses.

McConnell spokesman Don Stewart defended the provision, saying "horses and cows are the only capital not depreciated over three years."

Plus, he adds, "it's the largest agricultural product in Kentucky."

John Frydenlund, a food and agriculture policy director at Citizens Against Government Waste, said that "it's definitely doesn't belong in the farm bill. It's extraneous."

Regardless of who wins the Kentucky Derby, though, all the well dressed folks in the owners' boxes at Churchill Downs will likely be getting a tax break from Congress when the farm bill is finished.