Little arrows, for me and for you...

Much of the uproar about the Senate’s pork-ified bailout bill has centered around the first item on this list:

The special provisions include tax breaks for:

• Manufacturers of kids’ wooden arrows - $6 million.
• Puerto Rican and Virgin Islands rum producers - $192 million.
• Wool research.
• Auto-racing tracks - $128 million.
• Corporations operating in American Samoa - $33 million.
• Small- to medium-budget film and television productions - $10 million.

Turns out there are two stories here.

The first story is that the items on this particular list aren’t actually expenditures. Nobody is being given $6 million. What’s happening is a tax is being eliminated.  But in Congress’s upside-down “all your money belongs to us” accounting, anytime some poor benighted taxpayer gets to keep more of his hard-earned bucks it gets listed as an expense.  (And we actually pay these people to make up rules like this!)

Okay, the second story: What’s this all about?  For that we go to a pair of reader e-mails over at The Corner:
The first:

Under the Wildlife Restoration Act… [aka] the Pittman-Robertson Act… guns and hunting equipment are taxed... [The taxes are] returned to the States under matching grants to fund their hunting programs. Hunting arrows are subject to the tax… The purpose of the wooden arrow exclusion is to exempt toys from what is otherwise a hunting excise tax.

Understandable, except, as it turns out, “toy” arrows used to be excluded:

This provision was included to correct a mistake that was made several years ago in the JOBS Act, when the excise tax on archery arrows was changed from a percentage tax to flat rate of 39 cents. As a result of the imposition of this flat tax rate, producers of wooden practice arrows that cost 30 cents each are now required to pay 39 cents tax on each arrow – more than doubling the cost of these arrows.

So WTF is the JOBS Act (and wtf do jobs have to do with taxing arrows?)? Well, a search over at THOMAS turns up “H.R.4520 • the American Jobs Creation Act of 2004.” H.R.4520 turns out to be yet another one of those  everything-including-the-kitchen-sink bills that Congress loves so dearly. The table of contents page for this monstrosity runs 17 screens on my browser.  And sure enough, buried in the middle^[1] is Title III (“Tax relief for agriculture and small manufacturers”), Subtitle C (“Incentives for small manufacturers”), Section 332^[2] (“Simplification of excise tax imposed on bows and arrows”).  To wit:

SEC. 332. SIMPLIFICATION OF EXCISE TAX IMPOSED ON BOWS AND ARROWS.

(a) BOWS- Paragraph (1) of section 4161(b) (relating to bows) is amended to read as follows:

(1) BOWS-

`(A) IN GENERAL- There is hereby imposed on the sale by the manufacturer, producer, or importer of any bow which has a peak draw weight of 30 pounds or more, a tax equal to 11 percent of the price for which so sold.

`(B) ARCHERY EQUIPMENT- There is hereby imposed on the sale by the manufacturer, producer, or importer--

`(i) of any part or accessory suitable for inclusion in or attachment to a bow described in subparagraph (A), and
`(ii) of any quiver or broadhead suitable for use with an arrow described in paragraph (2),

a tax equal to 11 percent of the price for which so sold.'.

(b) ARROWS- Subsection (b) of section 4161 (relating to bows and arrows, etc.) is amended by redesignating paragraph (3) as paragraph (4) and inserting after paragraph (2) the following:

`(3) ARROWS-

`(A) IN GENERAL- There is hereby imposed on the sale by the manufacturer, producer, or importer of any arrow, a tax equal to 12 percent of the price for which so sold.

`(B) EXCEPTION- In the case of any arrow of which the shaft or any other component has been previously taxed under paragraph (1) or (2)--

`(i) section 6416(b)(3) shall not apply, and
`(ii) the tax imposed by subparagraph (A) shall be an amount equal to the excess (if any) of--

`(I) the amount of tax imposed by this paragraph (determined without regard to this subparagraph), over
`(II) the amount of tax paid with respect to the tax imposed under paragraph (1) or (2) on such shaft or component.

`(C) ARROW- For purposes of this paragraph, the term `arrow' means any shaft described in paragraph (2) to which additional components are attached.'.

(c) CONFORMING AMENDMENTS- Section 4161(b)(2) is amended--

(1) by inserting `(other than broadheads)' after `point', and
(2) by striking `ARROWS- ' in the heading and inserting `ARROW COMPONENTS- '.

(d) EFFECTIVE DATE- The amendments made by this section shall apply to articles sold by the manufacturer, producer, or importer after the date which is 30 days after the date of the enactment of this Act.

Well, that’s clear as mud, innit?

But (assuming I’ve got the right JOBS Act^[3]) the problem appears to have been created when the authors modified Subsection 4161: The added paragraph (3) says “any arrow.”  No exemption for toys!

And there we have it:  The original law– the one that created the tax to fund the states’ hunting programs– was either so confusing, so complicated, or so expensive that someone complained, and when it came time to write the 2004 bill, someone in Congress stuck in a section to make sure the arrow manufacturers got taken care of.  Unfortunately, they screwed up, and the toymakers suffered collateral damage.

And four years later, the provision to correct that mistake gets buried in the 340 non-germane pages of the 2008 financial bailout bill.  Lovely!


------

Posted by: Old Grouch in Rants at 00:48:26 GMT | No Comments | Add Comment
Post contains 969 words, total size 9 kb.