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NBAA Engaged in Latest SEC Disclosure, Tax Reform Discussions
August 15, 2014
While Congress may be in recess for August, the policymaking work in Washington, DC continues throughout the summer, and NBAA remains focused on a host of issues relevant to business aircraft operators, including federal taxes.
Recently, Scott O’Brien, NBAA’s senior manager for finance and tax policy, attended a congressional hearing on tax reform. The hearing, held July 30 by the House Ways and Means Subcommittee on Select Revenue Measures, covered dynamic scoring of committee Chairman Dave Camp’s (R-4-MI) discussion draft for tax reform, which was introduced in February.
“While NBAA wasn’t at this hearing to testify for or against dynamic scoring, we were there because we know that changes in federal tax policy have real implications for American businesses,” said O’Brien.
For example, one of the proposals in Camp’s tax reform plan is shifting many kinds of business equipment, including aircraft, from the modified accelerated cost recovery system, which is a five- or seven-year double-declining balance schedule, to the alternative depreciation system, with a 12-year straight-line schedule for depreciating aircraft.
Among the witnesses at the hearing was Scott Hodge, president of the Tax Foundation, a tax policy think tank. In his testimony, Hodge explained that shifting to longer depreciation schedules would reduce economic growth.
“Generally, when it comes to expensing provisions or provisions that allow full cost recovery, in the long run, [those provisions] end up paying for themselves,” Hodge told the subcommittee. “It has greater economic benefits than simply lowering the corporate tax rate.” Read Hodge’s full written testimony.
O’Brien said it was helpful to hear economic experts testify against using longer depreciation schedules to pay for other tax reforms.
“NBAA Members know that we’re advocating for them in Washington, but they may not realize that some of the biggest impacts on the industry can come from the specific details of large policy proposals,” said O’Brien. “That’s why we stay involved in the big-pictures debates, as well as the more specific industry hearings and rulemakings.”
Potential Reforms to SEC Reporting
O’Brien also attended a U.S. Chamber of Commerce panel on Securities and Exchange Commission (SEC) reporting. The discussion, held on July 29, focused on a report released by the chamber’s Center for Capital Markets, which offered ideas on modernizing the SEC’s disclosure regime.
“NBAA is interested in this U.S. Chamber project to help identify improvements to the SEC disclosure process that can be made without sacrificing integrity or transparency for investors,” said O’Brien. NBAA Members that are public companies are required to report certain use of company aircraft by named executives.
One of the improvements suggested by the U.S. Chamber report is streamlining requirements across various SEC disclosures to avoid unnecessary repetition of information. Another recommendation was retiring a requirement – added in 1980 – to report the company’s high and low share prices for the preceding two years, information that’s now widely available online.
“There was also a recommendation to consider whether the threshold for disclosing certain transactions with related parties, currently $120,000, was appropriate,” said O’Brien. “Updating that requirement could affect companies that have timeshare or lease agreements with a named executive to recover the cost of the executive’s personal use of company aircraft.”