Senator McConnell Introduces Legislation To Promote Kentucky's Horse Industry
*The Equine Equity Act will provide tax relief for horse owners*
U.S. Senator Mitch McConnell introduced a bill today designed to promote investment in the horse industry by removing unfair provisions of federal law that favor other investments. The Equine Equity Act of 2005 will reduce the capital gains holding period for horses, allow horse owners to depreciate all racehorses over the same period, and make horses eligible for federal disaster assistance.
"The horse industry is vital to Kentucky's economy and to the thousands of Kentuckians who participate in horse-related activities," said McConnell. "Horses are Kentucky's largest agricultural product. Our signature industry employs more than 50,000 Kentuckians and provides an annual economic impact of $3.5 billion to our Commonwealth."
The McConnell bill:
Would reduce the capital gains holding period for horses from 24 months to 12 months, which is the case with most capital assets. Currently, horses must be held for two years to receive capital gains treatment.
Would apply equal depreciation standards for all racehorses. Current law states that racehorses that begin training when older than 24 months of age are depreciated over three years, while those horses that begin training before reaching 24 months of age are depreciated over seven years. Most horses begin training before they reach 24 months, but their racing careers do not last seven years. The McConnell legislation would reduce the depreciation period to three years to more accurately reflect the racing life of horses.
Would establish equity in eligibility for disaster assistance between horses and other livestock. Most livestock are eligible for federal disaster assistance during a drought, but horses are not. This legislation would make horses eligible for disaster-assistance programs offered by the U.S. Department of Agriculture.
"There is no good reason why horses and their owners should not be eligible for the same disaster assistance as other livestock," said McConnell. "My legislation will remove the unfair tax burden on horses that discourage investment in the horse industry."
A recent study found that horse industry contributes approximately $39 billion in direct economic impacts to the U.S. economy each year. The industry sustains 1.4 million full-time jobs each year, with over 460,000 of those jobs created from direct spending within the industry.
The bill is co-sponsored by Senators Jim Bunning and Blanche Lincoln (D-AR).