Congress Targets Corporate Jet Tax Loophole

A top Republican indicated last week he may be willing to consider a Democratic proposal for deficit reduction that targets the owners of corporate jets.

Democrats, including President Barack Obama during a press conference June 29, are pledging to close a “tax loophole” for the owners of corporate jets.

Ed Bolen, president and CEO of the National Business Aviation Association (NBAA), blasted the president over remarks he made during the press conference. “The president has inexplicably chosen to vilify and mischaracterize business aviation – an industry that is critical for citizens, companies and communities across the U.S., and one that can play a central role in the economic recovery he says he wants to promote,” he charges.

The idea under review in Congress appears to be a rollback of legislation signed into law less than a year ago, allowing an extension of faster depreciation of commercial and general aviation aircraft one year after the aircraft are purchased, though little documentation has been circulated.

Republicans largely objected to the Democratic proposal as an example of a tax increase.

But asked June 28 whether there was some room for compromise with the White House in areas such as the corporate jet loophole, Sen. Jeff Sessions (Ala.), the top Republican on the Senate Budget Committee, indicated he might be open to it.

“I would have to look at that – but I’m not sure I think corporate jets are so valuable that they’d need a tax break,” says Sessions, adding, “we could consider that.”

Business aviation advocates who lobbied hard last year to keep rules for accelerated depreciation in place, are questioning the policy change, saying that details about it are sparse and that it seems carefully crafted to tap into populist outrage.

The tax break helps the aviation manufacturing industry, particularly while the economy was in a fragile situation.

Bolen, meanwhile, charges that Obama “has inexplicably chosen to vilify and mischaracterize business aviation.” Noting that just last fall Obama backed accelerated depreciation schedules to stimulate jobs, he says, “Now he seems to want to reverse course and push ahead with punitive treatment for general aviation, an industry that creates jobs, helps companies succeed and serves communities all around America.”

Bolen vows to fight the movement to change the tax policy, saying “The Obama proposal is bad policy and cynical politics. We will oppose the idea vigorously.”

According to the General Aviation Manufacturers Association (GAMA), Congress seems to be “attacking” corporate jets. “That talk may appear to be good politics, but the reality is it could hurt one of the leading manufacturing industries in the U.S,” says GAMA spokeswoman Katie Pribyl.