Second, for operations that are too big to benefit from Section 179, the bill expands "bonus depreciation," which allows 100% expensing of both new and used property in the first year it is placed in service -- including yearlings, breeding stock and farm equipment.
Third, the bill shortens the depreciable life for farm machinery and equipment from seven to five years and allows farms to use a faster depreciation schedule that front-loads the tax deductions in the first couple of years. Race horses already benefit from an accelerated three-year depreciation schedule.
Taken together, all these provisions significantly increase the ability of breeders, and to some extent owners, to write off their capital expenses faster, thereby reducing their tax bills in the short term. And in the long term, as economist John Maynard Keynes said, we're all dead.
Fourth, the bill reduces the nominal corporate tax rate from 35% to 21%. For those breeding operations organized as corporations, that means an immediate cash windfall. Trump and his sycophants say that will lead to increases in jobs and wages. More likely, it means that the farm owner or corporate CEO will be driving that new Maserati SUV.
Fifth, for the majority of breeders and racing stables that are organized as partnerships, limited liability companies and "S" corporations, the bill exempts roughly a quarter of income from tax, under the "pass-through" provisions that have been in the news. Coupled with the reduction in the top personal income tax rate, that means a successful breeder or owner would pay tax at less than a 30% rate, compared to nearly 40% under current law.
Sixth, the bill doubles the estate tax exemption from $11 million to $22 million, resulting in a windfall of more than $4 million (at the 40% estate tax rate) for the heirs of those who are smart enough to die before the Democrats retake Congress and return (I hope) to a sensible, progressive estate tax that makes deserving heirs like Paris Hilton or Donald Trump Jr. actually work for a living.
All of this, I guess, is good news for the country-club set and other richies, a few of whom do in fact participate in racing. And, while their new-gotten gains are unlikely to be translated into wage increases for their employees, they may be tempted to spend more for high-end race horses. Whether that does any good for the rest of the industry is quite another question.