Obama Excoriates Republicans for Corporate Jet 'Tax Loophole'

Two years ago, President Obama's stimulus package extended the 2008 bonus depreciation rules, which allowed for more accelerated depreciation for capital goods, including corporate jets. (Jet-makers Cessna and Gulfstream have manufacturing facilties in 12 American cities.) At yesterday's press conference, the President excoriated Republicans six times for opposing the elimination of this "tax loophole" (which press reports say would raise a relatively insignificant $3 billion over ten years).

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. ...

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. ...

And before we ask our seniors to pay more for health care, before we cut our children’s education, before we sacrifice our commitment to the research and innovation that will help create more jobs in the economy, I think it’s only fair to ask an oil company or a corporate jet owner that has done so well to give up a tax break that no other business enjoys. ...

So the question is, if everybody else is willing to take on their sacred cows and do tough things in order to achieve the goal of real deficit reduction, then I think it would be hard for the Republicans to stand there and say that the tax break for corporate jets is sufficiently important that we’re not willing to come to the table and get a deal done. ...

 If you are a wealthy CEO or a health -- hedge fund manager in America right now, your taxes are lower than they have ever been.  They’re lower than they’ve been since the 1950s.  And you can afford it.  You’ll still be able to ride on your corporate jet; you’re just going to have to pay a little more. ...

I’ve said to some of the Republican leaders, 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.  And I’m pretty sure what the answer would be.

As one commentator put it, "President Obama Was For Tax Breaks on Corporate Jets Before He Was Against Them."

• Accounting Today
• Associated Press
• Bloomberg
• Reuters
• USA Today
• Wall Street Journal
• Washington Post

Update: Think Progress reports that President Obama was not referring to the inclusion of corporate jets in the bonus depreciation rules, but instead to the 1987 shortening of the depreciation period for corporate jets from seven years to five years:

[S]ome folks are putting out a new myth that the tax subsidy in question was created by the American Recovery and Reinvestment Act.

The truth is that, much as you would expect, the White House negotiating team isn’t nearly that stupid. The source of the confusion is that congress passed a “bonus depreciation” law in 2008 as an economic stimulus measure, and ARRA continued it. This depreciation is a broad (albeit temporary) provision that includes to a wide range of capital goods including both commercial and corporate aircraft. By contrast, the tax break at issue in the negotiations is a 1987 provision of the tax code that allows corporate jets to be depreciated over a five-year period rather than the seven-year period required for commercial aviation. This is not something Barack Obama created, not something Barack Obama has ever supported, and not anything that has anything to do with the stimulus bill. It is, instead, a small but real subsidy that distorts the economy at the margin by encouraging large firms to invest in corporate jets rather than paying for commercial airfare.

See also National Journal: Obama’s Taxing Corporate Jet Policy:

While critics charge the president with flip-flopping, the story is more complicated. Obama included the tax break, called “accelerated depreciation,” in the 2009 economic-stimulus law to lower the cost of capital investments—including aircraft purchases—for millions of companies. Today, the administration is targeting a tax disparity dating back to 1987 that specifically favors business planes over commercial airliners.

“Nine months ago, this president extolled the virtues of shortening depreciation schedules to stimulate jobs,” National Business Aviation Association President and CEO Ed Bolen said in a statement. “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."