Last week President Obama touched off a new series of high-level flame wars with aviation industry leaders by calling for new taxes on bizjet owners while at the same time seeming again to call into question the legitimacy of bizjet use. In remarks during a press conference on June 29, the president focused on the need to eliminate tax breaks, referring specifically on more than one occasion to accelerated depreciation, a tax incentive that the administration embraced as part of its stimulus package in 2009. The speech came as a broader national debate on debt, revenue and taxes heats up this summer.
Obama outlined the proposal as a tough choice to cut tax breaks but lumped together hedge fund managers and bizjets owners to make his point: “There’s been a lot of discussion about revenues and raising taxes in recent weeks,” the president said, “so I want to be clear about what we’re proposing here. I spent the last two years cutting taxes for ordinary Americans, and I want to extend those middle-class tax cuts. The tax cuts I’m proposing we get rid of are tax breaks for millionaires and billionaires; tax breaks for oil companies and hedge fund managers and corporate jet owners.”
President Obama presented the choice as a dilemma between continuing funding for popular programs and tax breaks for the very rich. “It would be nice if we could keep every tax break there is, but we’ve got to make some tough choices here if we want to reduce our deficit. And if we choose to keep those tax breaks for millionaires and billionaires, if we choose to keep a tax break for corporate jet owners, if we choose to keep tax breaks for oil and gas companies that are making hundreds of billions of dollars, then that means we’ve got to cut some kids off from getting a college scholarship.”
The response from the industry was swift and unified.
Ed Bolen, president of the National Business Aviation Association, said that "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." Bolen also pointed out that the remarks fly in the face of the president’s recent strong support of the very incentive he is now attacking. "Nine months ago, this president extolled the virtues of shortening depreciation schedules to stimulate jobs," Bolen said in a press release. "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."
In a prepared response, Craig Fuller, president of the Aircraft Owners and Pilots Association, reminded the president that "the use of GA aircraft creates and sustains thousands of American jobs, and GA manufacturing is one of the few sectors that produces much needed U.S. exports – a fact the President himself acknowledged in the same news conference where he derided the use of those aircraft."
For a different view of President Obama’s about face on business aviation, read Robert Goyer’s Going Direct.