CQ TODAY ONLINE NEWS
June 28, 2011 – 10:56 p.m.
Fight Over Flights Enters Debt Limit Fray
By Kathryn A. Wolfe, CQ Staff
The builders and users of corporate aircraft find themselves on the defensive again, as Democrats point to them as beneficiaries of unwarranted tax breaks that could be scrapped as part of a debt limit bargain.
The planes are often cited during political debates as symbols of affluence. Democrats portray the tax breaks as evidence of Republican protection of big business at the expense of average taxpayers.
With negotiations over deficit reduction and raising the debt limit at a crucial juncture, Senate Majority Leader
Reid, D-Nev., also pursued that theme on his Twitter account, tweeting that “Rs are living in a fantasy world, protecting tax breaks for corporate jets & yachts when we need to reduce deficit. #WrongPriorities”
The White House had sounded the trumpet a day earlier. “This is about subsidies for oil and gas companies — $40 billion; a loophole that allows for the owners of private corporate jets to benefit enormously in the billions compared to, say, Delta or American Airlines,” said press secretary Jay Carney.
Corporate jets took a public relations beating in 2008, when auto industry executives arrived in Washington in a fleet of corporate aircraft to ask Congress for a bailout. Since then, the jets have come to symbolize a corporate culture out of touch with the hardships imposed on average Americans by the recession and the economy’s slow recovery.
Last week, House and Senate Democratic leaders called for taking away current tax benefits for corporate planes, which can be depreciated over five years. The normal depreciation period for commercial airliners is seven years. Current law temporarily allows 100 percent depreciation in the first year for business equipment including commercial and general aviation aircraft, but that provision is scheduled to expire at the end of the year.
“Right now, corporate aircraft get a better depreciation schedule than commercial aircraft,” said
Lengthening the depreciation schedule for corporate airplanes could bring in some additional tax revenue in the short-term, but it would have little longer-term impact on the deficit since the full cost of most planes would still be written off by their owners.
But aircraft manufacturers and their allies, who have lobbied long and hard for the current depreciation schedule, are not about to give it up without a fight. Dan Hubbard, spokesman for the National Business Aircraft Association, said accelerated depreciation creates good-paying jobs for highly skilled U.S. workers.
The industry also takes a dim view of the portrayal of business jet owners as corporate fat cats.
“We believe it is time for politicians to stop using our fiscal crisis to demonize industries, like general aviation, that create U.S. manufacturing jobs and work to find real solutions that significantly reduce the deficit,” Pete Bunce, president and CEO of the General Aviation Manufacturers Association, said in a written statement.