There’s so many times I’ve let you down, So many times I’ve played around, I tell you now, they don’t mean a thing intones John Denver in the classic (and Number 1 recording for Peter, Paul and Mary) Leaving on a Jet Plane.
So I don’t know what to say. I’m not sure if someone in the White House had a stroke, or some sort of Alien Invasion or what, but the President’s “jobs” plan funding proposal came out and low and behold, it contained the same tax increases that he has been proposing to pay for everything since he has been in office. These include: Tax increases on what the Administration euphemistically calls the Rich, and changes in the tax code that impact the evil oil and gas barons, hedge fund managers and the infamous corporate jet owners.
This makes the plan about as dead on arrival as one can be.
Now, in the spirit of fairness, I believe that the tax code is an absolute mess, and I would support the elimination of a large number of tax exemptions, breaks and depreciation allowances based on real tax reform. It is strange that a corporate jet would be depreciated over 5 years, and commercial jets over 7 years when in fact both can have 20, 30 or even 40 years of useful life. The fact is, the depreciation schedules in the tax code have little attachment to reality.
Even so, the President’s proposal to change the depreciation on corporate jets to 7 years will generate just $3 billion over 10 years, less than 1 percent of the funding for his jobs proposal. Based on the cost per job from his earlier stimulus plan, this could be expected to lead to about 12 new jobs. Problem is, it could also cost jobs at companies like Hawker-Beechcraft, Gulfstream and Cessna, companies that manufacture these aircraft. The economic question here is: Can these companies create more jobs at a lower cost than the government can?
The real reason for the corporate jet tax is less economic than political. By juxtaposing corporate jet owners, oil companies and hedge fund managers against teachers, construction workers and the middle class, the President is hoping to turn the electorate against Republicans. That is his job as the leader of the Democratic Party, and you can’t fault him for that. However, at the same time we should not presume that this proposal is either about creating jobs or improving the economy. It simply will not do that, and neither will adjusting the depreciation schedule for corporate jets.