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Aiming at jets, landing on jobs
October 5, 2011
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  • By R. Thomas Buffenbarger
    October 4, 2011

    President Obama has repeatedly attacked corporate jets as a symbol of all that’s wrong with American business, the tax code, and government finances. In one news conference during the debt-ceiling debate, he mentioned corporate jets no fewer than six times. More recently, he made ending a deduction for corporate jets one of three proposed sources of funds for his jobs legislation.

    In doing so, Obama may think he’s clipping the wings of high-flying CEOs. But the people who would really pay the price for this change in the tax code are workers in the general aviation industry – the people who build private planes (including members of the union I represent), as well as those who fly them, maintain them, and service them. The president seems to have forgotten about these people, who are trying to get by on a tiny fraction of a CEO’s salary in an economy that is shedding as many jobs as it creates.

    General aviation is among the industries hit hardest by the downturn. American manufacturers of private aircraft shipped more than 3,000 planes a year in 2007 and 2008, but that number fell to 1,334 last year. Net factory billings dropped from more than $13 billion in 2008 to less than $8 billion last year – the lowest level since 2004.

    The biggest losers in this were industry workers who lost their jobs. Obama’s proposal is a threat to the rest.

    It’s not as if we haven’t been down this road. In 1990, Congress passed a 10 percent “luxury tax” on “yachts,” which it defined as boats that cost more than $100,000. That would show the fat cats down at the yacht club, right?

    Wrong. The primary impact of the bill was to cripple the boatbuilding industry. Congress’ target may have been J. Topsider Moneybags III, but Joe Boatbuilder ended up taking the hit. The damage to the industry was so severe that Congress had to tuck its tail between its legs and repeal the tax two years later.

    Changing the depreciation rules for business jets, as Obama proposes, would generate no more than $3 billion in revenue for his $447 billion jobs bill. The decimal point would have to move one or two places to the right before this could have an appreciable impact on the jobs bill or the federal budget.

    I could laugh off this penny-wise, pound-foolish proposal if the president’s constant harping weren’t already driving away airplane customers and driving down profits, preventing the industry from offering more high-skilled, well-paying jobs to the long-term unemployed in dozens of states. Such jobs would be created in the private sector the old-fashioned way – without tax subsidies, tax credits, tax expenditures, or payroll-tax holidays.

    Obama’s idea makes even less sense when one takes into account the chance that Congress will enact it, which is near zero. Virtually every Republican member of Congress and more than a few Democrats realize that eliminating deductions for business jets would mean raising taxes and worsening the unemployment crisis. As small as the deduction is, getting rid of it would violate their core principles, which makes the provision a self-destruct mechanism in an urgently needed jobs bill.

    Millions of jobless Americans who put their faith in the president and the government need to go back to work sooner rather than later. Insisting on ending this deduction – one the same administration pushed for in the first stimulus bill – will only delay enactment of the jobs legislation, perhaps indefinitely.

    That Obama could break faith with jobless Americans over what amounts to an applause line is simply unconscionable. It demeans him, his office, and his audience, and it jeopardizes his plan to put the nation back to work.

    R. Thomas Buffenbarger is president
    of the International Association of Machinists and Aerospace Workers.

    Date: 2011-10-02