May I nominate Richard Epstein of the Hoover Institute as the first to go on the pyre when the plebes finally revolt and pick up their pitchforks?
The last thing we want to do is tax corporate executives and make them pay more for their business comfort…
…The big mistake in this area, therefore, is to assume that further restrictions on corporate jets necessarily result in more revenue for scholarships or food programs, as the president has claimed. The calculations are parallel to those made for the president.
Take a chief executive officer who earns ten times as much as the president does per hour. What is gained by stranding him in an airport, having him wait with countless other travelers—whose time is not worth one percent of his time—to catch a plane that might not get him to his final destination?
The tougher tax treatment of jet owners will inevitably lead to less use of these corporate jets. What the nation gets in direct taxes against corporate CEOs it loses in the reduced profits of the businesses that no longer use corporate jets as they once did. For a variety of reasons, this method of transportation is a lot cheaper for corporate officials, who have the option of chartering out the services of corporate jets from sites such as Luxury Jets, which offers “empty leg” specials that help boost the productivity of its own air fleet. Corporations look to their bottom line far more efficiently than the United States government looks to its. Thus, corporations seek out low cost solutions that are not possible for a presidential entourage for whom security is the highest and best good.
We can now see the primitive economics that lie behind the presidential rhetoric. First, it is not possible to gain more money for the public treasury by taxing heavily those practices that are efficient for a firm. Putting a special tax on corporate jets will cut corporate profits, leaving nary a dime to fund the worthy causes that the president promotes.
Dishonest argument is standard from the right, but this is really impeccable form. Obama has not proposed taxing corporate jets on a per flight basis. He’s proposed changing how corporate jets are treated as depreciating assets. If you really care about how to treat your corporate jet on your tax forms go here. It’s a bit complicated, but you can figure it out.
The depreciation schedule for a new corporate aircraft is determined after its first year of use and doesn’t change even if the primary use of the aircraft shifts from, say, business to personal travel. The favorable tax treatment CEO’s are currently receiving encourages them to buy new aircraft, but it has no impact on existing aircraft. It will cost no more and no less to fly existing jets.
It’s no surprise that this paid hack has created a strawman argument, but the shamelessness of it is quite impressive. Surely he is aware that only Iceland has lower corporate taxes than the United States, and that many corporations pay no taxes at all, even when they are quite profitable. This tax break might spur some growth in jet manufacturing by encouraging sales, but it’s not going to do much at all to the bottom line of corporations, and it certainly won’t eliminate their profits and dry up the government’s coffers.
