Wednesday, February 6, 2013
NBAA, White House Disagree on Corporate Jet Tax Depreciation
Business aviation groups are criticizing recent comments from the White House calling for an end to tax code “loopholes” available to corporate jet owners.
Responding to a question about President Barack Obama’s proposal that includes tax reforms to avoid the upcoming sequester, Press Secretary Jay Carney said the president wants to eliminate “loopholes that give tax advantages to the wealthy.” Under the current tax code, companies that use jets for business purposes can depreciate taxes on corporate jets over five years, compared to the seven years allowed for commercial airplanes.
National Business Aviation Association (NBAA) President and CEO Ed Bolen said changes to the depreciation schedule would not significantly contribute to revenue increases that would allow the government to pay down the national debt, which is the Obama administration’s intended purpose.
“Everyone agrees on the need to find meaningful ways to reduce the nation’s debt, and to do so without harming the nation’s economy. As our country pursues this critical policy objective, it is important to ensure that the proposals we consider are based on reality rather than rhetoric. Unfortunately, in the course of the debate over the debt, the White House has recently focused onmisleading statements related to depreciation schedules for business aircraft,” said Bolen.
Bolen issued similar statements last fall when Obama called for the same changes during a presidential campaign debate.
The General Aviation Manufacturers Association (GAMA) agrees with Bolen’s statements.
“Once again, the Obama administration is starting the drumbeat that we could end all the fiscal challenges our nation faces by changing the depreciation schedule for general aviation and business aircraft from five to seven years. Their rhetoric is wrong and all it does is hurt general aviation companies and workers across this country,” said Pete Bunce, President and CEO of GAMA.
Bunce said general aviation contributes more than $150 billion to the U.S. economy per year and employs more than 1.2 million people, and the depreciation schedules spur manufacturing sales, whereas the proposed tax reform could possibly have the opposite effect.
Several Congressional Republicans have not been receptive to the president’s proposal, with Senate Minority Leader Mitch McConnell calling the corporate jet proposal “a cheap stunt.” More