Obama plans to raise taxes on Corporate Aviation

In years past if business executives needed to travel they were required to hop in line at the airport just like everyone else. They would spend all day checking in to the airport flying to their meeting and getting on the next plane home over the course of 24 hours. Corporate aviation has made it possible, however, for businesses to fly to multiple meetings in a day in multiple locations and still be home in time for dinner; it eliminates the long security lines, the baggage claims, the planes can land in smaller airports with less traffic, this brings business to more airports, smaller communities and FBO’s. The general image of corporate flying is one of needless, luxurious travel but the general public doesn’t know the truth behind corporate flying. Attending meetings in multiple states in the same day opens up the opportunity to close deals at a much quicker pace than was previously possible. Where one person might only be able to fit so many commercial flights into week, corporate aviation has made it possible to fly anywhere anytime at the drop of a hat and even hold meetings on the plane itself. Corporate aviation is not only an important part of the economy but it is an essential part of it according to GAMA/IAMAW corporate aviation lends to 60% of the United States exports and USA Today reports that it creates 1.2 million jobs and generates $150 billion per year.

            Recently Corporate Aviation has come under attack from the President who wishes to repeal a law that he signed a few years ago that gives Business Aviation programs the right to use Accelerated Depreciation on newly bought aircraft, which means that for accounting purposes aircraft depreciate faster in the beginning which allows companies larger deductibles. This benefit was part of the stimulus package that the President signed in 2010 to help encourage economic growth but recently the President has changed his mind, according to CNS News the President is under the opinion that companies who can afford to pay for their own aircraft can afford to pay more taxes and if unwilling to do so it will be America’s children who suffer for it through higher tuition and cuts to education.

            While the country’s deficit is growing larger, the President’s view on raising taxes on corporate aviation was not received well by the industry. According to USA Today Ed Bolen the CEO of NBAA sent a response to the President reminding him of the jobs that corporate aviation has created across the country, and according to the EAA Pete Bunce, the President of GAMA would like to know how the Obama administration plans on meeting its goal of doubling exports if it plans on cutting into the industry that is responsible for the majority of exported goods.

            In my opinion the tax cuts are not only a bad idea, but are not even worth it. USA Today states that the cuts will only produce $3 billion over 10 years and in that same amount of time the deficit is projected to be $7.2 trillion. I believe that the cuts are a drop in the bucket and would cause more harm to the industry and the economy than it would benefit it. Not to mention that as accelerated depreciation goes, the largest deductibles for companies are in the first few years, as depreciation slows later in the aircraft's lifespan the deduction will increase generating more tax dollars. If you ask me, the money needs to come from somewhere else. 

Eaa applauds gama/iamaw response to attack on aviation industry. (2011, June 29). Retrieved from http://www.eaa.org/news/2011/2011-06-29_gama.asp

Fernholz, T. (2011, June 29). Obama’s taxing corporate jet policy. Retrieved from http://www.nationaljournal.com/obama-s-taxing-corporate-jet-policy-20110629

Lucas, F. (2011, June 30). Obama for corporate jet tax break before he was against it - see more at: http://cnsnews.com/news/article/obama-corporate-jet-tax-break-he-was-against-it

Wolf, R. (2011, June 30). Obama targets private jets, big oil. Retrieved from http://content.usatoday.com/communities/theoval/post/2011/06/obama-targets-corporate-jets-hedge-funds-big-oil/1