Andrew Langer The Detroit News
Langer: Proposed Tax Policies Vilify Business Aviation
April 15, 2024
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  • I am increasingly convinced that the Internal Revenue Service fundamentally does not understand the way the economy and the private sector work, and President Joe Biden’s State of the Union Address, proposed FY2025 budget, and more recent comments from Treasury Secretary Janet Yellen and IRS Commissioner Danny Werfel only reaffirmed that.

    In the State of the Union, Biden mentioned new tax policies later detailed in the White House budget that seem to be intended to score political points rather than improve the federal tax system.

    Take, for instance, the vilification of business aviation. Biden’s policies would, in part, eliminate a tax break that “gives preferential treatment to corporate jets, compared to commercial aircraft,” increase the fuel tax on corporate and private jet travel and give the IRS more resources to “crack down on high-end tax evasion like deducting personal use of corporate jets as a business expense.”

    The administration seems to be more interested in punitive action against a Mister-Money-Bags-type caricature than understanding and acknowledging the diversity and function of business aviation.

    In reality, 85% of companies that utilize business aviation are small- to mid-size businesses. They do so to increase their productivity and visit multiple sites in a day with the tools they need. Many of these companies are in blue-collar industries like manufacturing, construction, food processing, and in many cases are the largest employer in the small towns they are based. Some ranchers, for instance, use an aircraft to monitor their herds and to travel to livestock auctions across the rural Great Plains.

    Biden’s words land differently if your point of reference to start with is a rancher with a small single-engine prop-plane.

    Using a small aircraft opens up about 5,000 public use airports across the country, essentially one in almost every town, the large majority of which do not have commercial service. In fact, most commercial traffic only goes through 30 large airports. For a business operating in a rural part of the country, there is a real value to this point-to-point access.

    As a whole, general aviation, including business aviation, is a $247-billion-per-year industry, and is part of a critical air transportation system with infrastructure that supports essential functions like medical response and other emergency services, firefighting, natural disaster relief, border security and federal land management.

    Cutting through the campaign messaging and getting to the substance, the depreciation schedule for business aircrafts is not a “loophole.” It is the same as a host of other business tools, like tow trucks and bulldozers and other capital equipment. Depreciation serves a purpose, whether in the context of a farm’s tractor, a restaurant’s freezer, or an auto part manufacturer’s small aircraft, of incentivizing businesses to purchase or update assets, which in turn keeps these businesses competitive and supports the supply chains and jobs associated with the capital investments.

    These policies outlined in the State of the Union and White House budget would not solve an existing problem; the IRS has not signaled that there are issues with business aviation operators complying with current laws. The president’s comments and proposals simply come down to scoring political points ahead of a tough election, which is no basis for tax policy.

    Andrew Langer is president of the Institute for Liberty.