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July 21, 1999

Chicken Droppings, Tackle Boxes and Tax Legislation


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  • Republican Schism Over Tax Cuts
    By DAVID E. ROSENBAUM

    WASHINGTON -- Buried deep in the giant tax-cut bill the Senate Finance Committee began debating Tuesday is fine print that could turn chicken droppings into a tax shelter.

    On the other side of the Capitol, the House of Representatives is planning to vote on Wednesday on a companion bill that includes a section removing the excise tax on fishing-tackle boxes.

    Like most other tax bills before Congress in recent years, the measures in the Senate and House this year contain dozens of narrow provisions like these benefiting one particular interest or another -- or, to put it another way, benefiting one particular constituent or another of an important senator or representative.

    In the case of the chicken droppings, the important lawmaker is Sen. William Roth, R-Del., chairman of the Finance Committee. The nugget he inserted in the Senate bill would give tax credits to companies that convert waste swept from the floor of chicken coops into electricity.

    This has long been a dream on the Delmarva Peninsula -- Delaware and the eastern shore of Maryland and Virginia -- where chicken farming is the largest agricultural enterprise and where producers like Perdue Farms and Tyson Foods have big factories and thousands of employees.

    Nowadays, chicken manure is used for fertilizer. But this has become a major source of pollution, and all three states have new laws that will eventually ban this source of fertilizer. So the question, said Bill Satterfield, executive director of Delmarva Poultry Industry Inc., a trade association, is becoming how to dispose of the 800 tons of chicken droppings produced on the penninsula every year.

    The technology has long existed for producing electricity by burning chicken manure. The problem is, it has never seemed profitable. So it has never been tried in the United States.

    A tax credit might help in this regard. But the chicken farmers and producers on the Delmarva Penninsula should not get their hopes up.

    Rep. Bill Archer, R-Texas, chairman of the House Ways and Means Committee, is not wild about the measure, staff assistants said, and will probably fight it in the conference committee to resolve differences between the Senate and House tax bills. The reason: The tax credit could put chicken droppings in competition with oil and gas as a source of energy.

    In fact, Archer, whose district is in Houston, put into the House bill several tax breaks for his constituents in the petroleum industry. One, for example, allows more favorable tax treatment for income from foreign oil and gas. Another allows new writeoffs for wells that are marginally productive.

    The tackle box provision in the House bill approved last week by the Ways and Means Committee owes its existence to Speaker J. Dennis Hastert. One of the largest manufacturers of tackle boxes in the country, Plano Molding Co. of Plano, Ill., is in Hastert's district.

    For years, the president of the company, Pete Henning, has been coming to Washington trying to persuade lawmakers to repeal the 10 percent excise tax on tackle boxes. He even hired a lobbyist, George Mannina.

    But Henning and Mannina had no success until this year, when Hastert became speaker.

    This is their argument: A 1984 law placed a 10 percent federal tax on fishing equipment. The money goes into the Sport Fishing Account of the Aquatic Resources Trust Fund and is returned to the states to pay for hatcheries, water-safety measures and other sport-fishing activities. The program is popular among fisherman.

    Plano Molding's problem is that the plastic tackle boxes it makes are indistinguishable from containers made by other manufacturers that are called tool boxes or sewing boxes and are not subject to the tax. Side by side on the shelf of Walmart, Plano's boxes are more expensive, and the company believes that is unfair.

    This argument may not carry in the Senate.

    In addition to Hastert's influence, Rep. Gerald Weller, R-Ill., who comes from an adjacent district and who has many constituents who work for Henning, is a member of the Ways and Means Committee.

    But Mannina said he had not been able to get a comparable provision in the Senate bill. The Finance Committee has no members from Illinois, and no one on the panel, Mannina said, was prepared to take on the cause of Plano Molding.

    That may have been because they were too busy taking care of their own.

    For instance, Sen. Frank Murkowski, R-Alaska, was able to get several tax breaks for his constituents.

    One would exempt Alaskans from the requirement that dye be put in diesel fuel.

    Under federal law, all other distributors of diesel fuel must dye it to distinguish it from home heating oil, which is otherwise the same product. Diesel fuel is taxed as a motor fuel, and heating oil is not.

    Alaskans argue that it is impractical for remote villages in Alaska to have two storage tanks, one with diesel fuel and the other with heating oil. But without the dye, collecting the proper tax on diesel fuel would be problematic.

    Another Murkowski measure would allow Eskimo whaling captains to claim charitable deductions of up to $7,500 to offset the cost of whale hunts.

    The argument is that the captains pick up the costs for people in their villages to go on whale hunts that are allowed under international whaling agreements. They then divide the whale meat, called muktuk, among the villagers, who rely on it for subsistence. Since the captains give the muktuk away, the argument goes, it should be treated no differently from any other charitable donation.

    A similar measure was passed by the Senate in 1994 but died in the House. Environmentalists maintained that it would encourage more whaling.




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