March 19, 2013
The possible negative consequences from altering the tax-depreciation schedule for general aviation aircraft were recently highlighted by Rep. Todd Rokita (R-4-IN) during a hearing on the proposed fiscal year 2014 budget.
At issue was an amendment to a bill, sponsored by House Democrats, which would have altered the depreciation schedule for non-commercial aircraft purchases from five years to seven years. The White House has repeatedly called for an end to what the president terms the “corporate jet tax loophole,” asserting the adjustment would yield $3 billion in additional revenue over the next 10 years.
In the March 13 hearing in the United States House of Representatives Budget Committee, Rokita said the proposed amendment sought to “demagogue” business aircraft users, and would’ve harmed small business owners and general aviation pilots operating their aircraft on a variety of missions.
“We get some kind of satisfaction out of saying that they don’t pay their fair share,” he added.
Rokita, himself a commercial pilot, then displayed a photo of Dan and Andi Montgomery, owners of Indiana fixed-base operator Montgomery Aviation, which supports general aviation operations including medical flights, airborne search-and-rescue, disaster relief, and law enforcement and agricultural support roles.
“Do they look like globe-trotting, jet millionaires to you?” he asked rhetorically. “They’re small business owners.”
Rokita reiterated that any estimated gains from the depreciation schedule adjustment would be offset by the profoundly negative impact to all general aviation, including business aviation, which contributes more than $150 billion annually to the economy and employs more than 1.2 million Americans. Businesses relying on general aviation would be hit with increased capital costs, he added, as well as a drop in aggregate demand, manufacturing employment, and the number of GA service providers.
“When we demagogue the ‘jet-tax loophole’, and those people who might benefit from a simple business depreciation schedule, you might think about the real face of general aviation and the people who work in it who serve this country, and who we’d really hurt,” Rokita added. The amendment was ultimately voted down by the committee, by a vote of 17 to 22.
NBAA Senior Vice President, Government Affairs Lisa Piccione welcomed the groundswell of support from congressional lawmakers for the industry.
“Our Association is gratified by the support our industry has received from elected officials like Rep. Rokita and others in the House and Senate, who recognize that general aviation is an essential tool for citizens, companies, and communities across the country,” she said.