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The Truth About Corporate Jet Taxes

""I'm gunning for you corporate jet owners!"I've said to Republican leaders, You go talk to your constituents and ask them, are you willing to compromise your kids' safety so some corporate-jet owner can get a tax break?"

Barack Obama

The reason the stock market is in the tank is not just because our spending and debt are out of control; it's because we have a president who refuses to offer a solution to the crisis, but rather sees it as a never ending opportunity to demagogue against successful job creators in the private sector.

Dereliction of Duty?

When Obama took the oath to become president, he swore to do everything in his power to look out for us. Forget the politics for a minute and focus on the underlying message in the above quote. Obama is clearly saying that republicans are risky the safety of the American children by giving corporate jet owners a tax break.

It's obvious that Obama loves to demagogue against corporate jets. That's not my problem. My problem is that he does it in the context of solving the debt crisis and helping the economy, implying that the elimination of the corporate jet tax credit would most certainly benefit the US economy.

What is this was patently false and Obama knew it and Obama kept lying about it to the American people; wouldn't that be dereliction of duty?

The 1990 Luxury Tax Attack

If you're political neophyte, like most Obama supporters, you may believe that Obama discovered the corporate tax break while doing his due diligence to cut spending - not true.

In 1990, big time democrat Dan Rostenkowski wrote the Omnibus Budget Reconciliation Act of 1990, which included a 10% excise tax on so-called luxury items like yachts, and guess what -- corporate jets. The law was designed to stir up the same kind class warfare that Obama's corporate tax jet rhetoric is targeting.

So, how did that work out for the American economy?

Within eight months after the law took effect, Viking Yachts, the largest company in the industry, laid off 1,140 of its 1,400 employees and closed one of its two manufacturing plants.
In the first year, one-third of all yacht building companies in the U.S. stopped production, and according to a Congressional Joint Economic Committee, the industry lost 7,600 jobs. Before it was over, 25,000 workers had lost their jobs building yachts, and 75,000 more jobs were lost from the indirect effect on companies supplying parts and materials to the yacht companies. Ocean Yachts trimmed its workforce from 350 to 50. Egg Harbor Yachts went from 200 employees to five and filed bankruptcy. Viking Yachts was down to 68 employees.
The U.S., which had been a net exporter of yachts, became a net importer as U.S. companies closed. Jobs shifted to companies in Europe and the Bahamas, and the U.S. tax law collected zero revenue from the sales it had driven overseas.
Congress estimated the luxury tax on boats, aircraft and jewelry would raise $5 million in revenue a year. The Congressional committee concluded the value of jobs lost in just the first six months was $159.6 million. Overall, the Treasury lost $24 million through lost income tax revenue, higher unemployment and welfare payments. In 1993, realizing the cost of just administering the program was higher than the revenue being collected, Congress repealed the tax.
Beech Aircraft says it lost 39 airplane sales in the first quarter following imposition of the tax on January 1, 1991. It had planned to add 500 new jobs in the following year but ended up laying off 20 workers (source: The Heartland Institute).

Even I, your humble private sector career crusader, was shocked by these facts. Not only were the careers and families of tens of thousands of American's thrown into tumult, but entire industries were damaged beyond repair.

Perhaps the stupidest part of the who debacle was the financial outcome -- which was the only rational for changing the tax code in the first place. Rather than raise tax revenues by the projected $5 million/year, it turned out costing the taxpayers $24 million!

Which brings us back to the crisis of confidence in the faith and security of the United States under Barack Obama. The crisis is real, the debt is freaking skyrocketing, and the future of America is on the line.

So what does our president do? He demagogues against corporate jet tax breaks and goes on vacation to Martha's Vineyard in a 747 that "we the people" pay for!

No wonder no one wants to buy stock in America companies...

Dave

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The Truth About Corporate Jet Taxes
Thursday, 11 August 2011

Who Stole My Career?

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