“"Many years ago, our company founder, Al Conklin, sold a new twin-engine business aircraft to a very successful entrepreneur. He had established a bit of a rapport with the individual and, after the sale, asked him straight out, 'How can you justify the cost of this airplane?' His reply? 'What is the cost of a divorce?'"–David Wyndham, president, Conklin & de Decker”
Is President Obama Really Calling the Bizav Industry "Bad"?
Virtually every industry and profession in America enjoys the backing of an association and its lobbyists. And it doesn’t matter whether those lobbyists represent funeral directors, textile manufacturers, dairy farmers or dental consultants–they’re all banging on Congress’ door with the same message: Our association’s members play a vital role in this economy, create jobs, provide important products or services and deserve every possible tax break.
Sometimes, the fervor of these lobbying groups results in messages that sound a bit fanciful, such as when the National Air Transportation Association encouraged President Obama and Mitt Romney to focus in their October 16 debate on “the invaluable services that the general aviation community provides to the U.S. and global economy now and moving forward.” Can you imagine Obama or Romney ever saying, “Before I answer that question about Afghanistan [or abortion or unemployment or whatever], let me just take a minute to highlight the invaluable services that the general aviation community provides”? Not gonna happen.
Still, I’m not surprised when business aviation associations issue statements like NATA’s. Lobbying groups earn their keep by vigorously promoting the interests of the professions and industries they represent. That’s their job.
Occasionally, though, their defenses extend beyond the fanciful to the slightly ridiculous. That’s what I think happened after the first presidential debate of 2012, during which Obama suggested that we stop giving tax breaks to companies that are doing well. As he has in the past, the president cited oil companies and businesses that operate corporate jets as examples. Regarding the latter, his comment in full was as follows: “Why wouldn’t we eliminate tax breaks for corporate jets? My attitude is if you got a corporate jet, you can probably afford to pay full freight, not get a special break for it.”
Judging by the reaction of the National Business Aviation Association and other industry leaders, you’d think the president had called everyone in bizav a crook. Based solely on the two sentences quoted above, NBAA CEO Ed Bolen said the president had “disparaged” the industry, “completely mischaracterized” it, “vilified” it and “denigrated” it. JSSI chairman Lou Seno chimed in, calling Obama’s comment an “attack on business aviation” by someone who “does not understand how business is conducted, both in the U.S. and around the world.” Retired Cessna CEO Jack Pelton, meanwhile, said, “We cannot continue to be reflected by the president as an industry that is ‘bad.’”
Granted, this is a complicated issue–more complicated than the prose that typically issues from either lobbyists or presidential candidates–and nobody’s 100 percent right or wrong. On the one hand, it’s probably time for the president to find new examples of tax breaks that ought to be eliminated. Ending breaks for business aircraft–an apparent reference to bonus depreciation, which was part of the stimulus package Obama himself signed–wouldn’t exactly do much to deflate the national debt. And Obama does make inordinate mention of business aviation in this context, probably because research has shown “corporate jets” to be a phrase that conjures up the ultra-rich among undecided voters.
But Republicans have their catch phrases too, some of which also promote rather inaccurate images. And the reality about corporate jets is probably somewhere between what these undecided voters imagine and what the business jet industry wishes they would envision. As the editor who put together a special issue of Business Jet Traveler called “The Bizav Advantage,” I fully understand that business jets are not used primarily to transport the wealthy from playground to playground; they’re employed by lots of executives and middle managers to boost efficiency and productivity. But let’s get real. Off the top of my head, I can’t think of any poor people who own business jets–nor am I even aware of any struggling businesses that are out shopping for jets at the moment. The companies that are buying and operating aircraft in this or any other economy tend to be the ones that are doing better than most. In fact, studies cosponsored by the NBAA have repeatedly suggested exactly that. It’s questionable how many of these companies would actually forgo jet purchases just because the tax break went away.
Moreover, as I noted in a blog post last year, there are other reasons why the elimination of bonus depreciation for business aircraft buyers might not do significant harm to the industry or the economy. As BJT tax columnist Jeff Wieand has noted, for example, bonus depreciation could ultimately result in higher aircraft prices. Also, the companies that manufacture many of the business jets sold in the U.S. are based outside our borders. As such, a tax break for purchase of their aircraft does little to help the American economy.
All that said, sensible counterarguments exist and I can understand why some people believe corporate jet buyers should receive a special depreciation deduction. That’s a reasonable position. What’s not reasonable, it seems to me, is suggesting that anyone who disagrees about this is denigrating, vilifying and disparaging business aviation. Advocating elimination of an industry’s tax break is just not the same as calling that industry “bad.”