UK-based Diageo, the world's biggest liquor company that sells Captain Morgan's rum, is enjoying a $2.7 billion subsidy from the US Virgin Islands, aided in part by a tax break rubber-stamped by Congress annually with little public debate.
Recipients of more than $30 billion of tax breaks like these hope to catch a ride on the payroll tax legislation expiring next month, with special interests - from Diageo to Nascar racetrack owners to major US banks - lobbying to win renewals of their preferences in the sprawling US tax code.
Popular items like the research and development credit, enjoyed by most of corporate America, and smaller provisions, like a shorter write-off period for motorsports complexes that primarily benefits owners of Nascar tracks, are in the mix. "Our criticism is it is on autopilot - once you get into that caboose, you catch a ride every year," said Steve Ellis, a vice president at Taxpayers for Common Sense, a non-partisan federal spending watchdog group.
The hodgepodge of tax breaks, including the rum credit, has been sailing through Congress for years with bipartisan backing. But even with a Tea Party-infused Congress hostile to government spending, chances are slim in an election year that what some call a gravy train will be stopped.
"Politicians don't want to take the heat," said Republican Senator Tom Coburn, a frequent critic of special tax breaks.
Coburn and other lawmakers say it is a symptom of a much bigger headache - a sprawling tax code that badly needs a rewrite. Lawmakers are laying groundwork for an overhaul, but no one believes that feat can be achieved this year. "The members' attitude is, 'let's wait until tax reform,' " to address the merits of each tax provision, said a staff member for a senior tax lawmaker who was not authorised to comment.
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