March 25, 2013
The Washington Post, one of the most widely read newspapers in the country, last week turned its “Fact Checker” report to the White House’s proposal targeting business aircraft tax policies for deficit reduction and found it “misleading.” As Congress has debated ways to lower the nation’s deficit, the Obama administration has repeatedly called for changes to taxes on business aircraft purchases, even calling long-established tax policies a “loophole.”
The Post’s Fact Checker blog examined the factual basis for such claims, which were most recently represented in a chart created by the Center for American Progress (CAP) and titled “Tax loopholes for corporate jets or investments in jobs and education?” The chart – shared on Twitter by Organizing for Action, President Obama’s political organization – claims Congress could avert dangerous cuts – to programs such as nutrition assistance for women and children and special education – with a dollar amount equal to the savings from closing “the corporate jet loophole.”
Acknowledging the potent symbolism of this claim, the Post debunked the existence of a “corporate jet loophole.” As the Fact Checker’s reporter wrote: “This is not so much a loophole as a different way of depreciating the assets.”
Citing a recent Reuters article, in which NBAA President and CEO Ed Bolen is quoted, the Post explained the U.S. tax code treats business aircraft as it does bulldozers, computers and other business equipment, allowing companies to deduct their cost over five years. While Fact Checker acknowledged the depreciation schedule in the tax code hasn’t been significantly updated since 1959 and should likely be part of a comprehensive tax reform debate, it found no justification for singling out business aircraft.
It’s especially unjustified because, as the Post put it, the $300 million per year that “changing this minor quirk in the tax law would raise” amounts to “chicken feed” in any potential deficit reduction plan. Because the CAP chart, and the White House’s claims, focus on “this relatively minor tax disparity” rather than “the really big ticket items” of tax reform – and because widely used depreciation schedules are not a loophole – the Fact Checker gave the proposal one “Pinocchio” for telling a selective version of the truth, with notable omissions and exaggerations.
“It’s about time someone shed some light, instead of only heat, on this claim that treats our industry of 1.2 million workers as a political scapegoat,” said Bolen. “As the Post rightly points out, the tax code applies equally to all types of business equipment. There is no loophole for business aircraft, no special carve-out just for airplanes, which are a tool companies rely on like any other to do business more productively and efficiently.”
The Washington Post is only the latest news organization to question the White House’s business aviation rhetoric. In addition to last week’s Reuters article on the damage its done to the local economy of Wichita, KS, reporters from the city’s ABC affiliate, KAKE-TV, and Capitol Hill newspaper Politico have repeatedly asked the White House in press briefings to address the impact of their proposals on employment in the one of the world’s airplane-manufacturing centers.
International Business Aviation Council Ltd.