June 30, 2011
General aviation employs 1.2 million Americans and generates $150 billion a year in revenue. President Obama praises it as one of America’s industries that still maintains an advantage over other countries’ manufacturers.
So it disappointed several in the aviation industry when the president on Wednesday held up an obscure tax break for corporate jet owners as an example of why Congress should close tax loopholes as part of any deficit reduction deal.
“While such talk may appear to some as good politics, the reality is that it hurts one of the leading manufacturing and exporting industries in the United States,” wrote the General Aviation Manufacturers Association and the International Association of Machinists and Aerospace Workers in a letter sent to the president.
In a lengthy press conference, Obama repeatedly cast the debate over the deficit as a choice between ending tax breaks for jet owners and jeopardizing children’s education and safety.
“You go talk to your constituents — the Republican constituents — and ask them, are they willing to compromise their kids’ safety so that some corporate jet owner continues to get a tax break?” Obama said, recalling his discussions with Republicans.
Repealing such a tax break would add up to just $3 billion over 10 years, a tiny step toward the $4 trillion over 10 years that Obama and others are calling for in deficit reduction.
The kind of tax break Obama criticized was actually granted to corporate jet owners in the Democrats’ stimulus package in early 2009. That provision let companies take bigger deductions earlier for depreciation.
Several organizations lambasted the president for his rhetoric.
“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,” National Business Aviation Association President Ed Bolen said in a statement.
He called on Congress to reject the call, describing the current tax structure for jet owners as a “proven formula for incentivizing the purchase of American products.”
“Equally alarming, the president’s disparaging remarks reflect a total lack of understanding — or a complete disregard — for general aviation in the U.S.,” Bolen said, describing his proposal as “bad policy and cynical politics.”
Ironically, Obama praised the U.S. aviation industry just minutes after describing its tax treatment as an example of what is wrong with the tax code.
“Obviously, the airplane industry is an area where we still have a huge advantage. I want to make sure that we keep it,” Obama said, as he called on Boeing, union workers and the National Labor Relations Board to resolve a contentious dispute that’s dragged on for weeks.
The president also plans to fly in the country’s most famous personal jet — Air Force One — to get to Democratic National Committee fundraisers in Philadelphia Thursday night.
In their letter, the aviation manufacturers and machinists and aerospace workers groups warned that “the rhetoric” could cause economic hardship. They noted that Transportation Secretary Ray LaHood recently visited the aviation industry hub of Wichita, Kansas, and lauded the industry’s work.
Obama’s comments Wednesday underscored the deep divide between Democrats and Republicans as they try to piece together stalled talks over deficit reduction. Republicans want significant spending cuts as a condition for supporting an increase in the $14.3 trillion debt ceiling. They oppose tax increases, but Obama and congressional Democrats say revenue has to be on the table.
Obama highlighted tax breaks for oil and gas companies as one possibility, but mentioned corporate jet owners no fewer than six times in his opening remarks. He pitched ending their tax breaks as far more palatable than making certain cuts to spending.
“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, that means we’ve got to stop funding certain grants for medical research, that means that food safety may be compromised, that means that Medicare has to bear a greater part of the burden,” Obama said. “Those are the choices we have to make.”
Source: Aviation Industry Assails Obama for ‘Cynical’ Call to End Corporate Jet Tax Break