President Obama is in full re-election campaign mode, demonstrated by his absurd comments about subsidies for “corporate jets” in his June 29 press conference. This wasn’t some off-the- cuff remark. It was crafted by his political strategists and refined by his speechwriters who loaded it onto his teleprompter. He repeated it a half- dozen times during the presser and wove it into his recurring theme of raising taxes on corporations and the rich.
The phrase was a daily double of demagoguery. In the leftist mentality, “corporation” is a dirty word and a “corporate jet” is both dirty and extravagant. Throw in tax “loophole” and you have a populist, political trifecta.
A loophole is a sneaky device exploited to evade the intent of an agreement or a law. A tax preference — such as the tax deduction for interest on your home mortgage — isn’t a loophole if it was intended to encourage specific behavior desired by the government. The corporate-jet “subsidy” Obama treated as scandalous simply allows a company that purchases a business jet to depreciate it over five years instead of the standard seven for commercial aircraft. It was previously offered as an incentive to help the aircraft industry rebound after 9/11. Obama apparently thought so highly of it that it was included it in his economic stimulus plan, which Democrats in Congress passed when they were in the majority. Just when did it become a sneaky loophole?
Depreciation allowances aren’t subsidies to businesses; they’re burdens. A business would much rather take the full cost of a capital asset in the year of purchase, which would immediately reduce its reported income, lowering its income tax. When the government mandates that a company stretch out its capital expenses over an extended period, it forces the company to pay higher taxes on the front end of an asset’s life. Moreover, a reduction in a company’s tax bill isn’t a subsidy. The money belonged to that business to begin with. Allowing it to keep more of what it earned isn’t a gift.
In the context of our massive federal deficits and exploding national debt, Obama’s theatrics over corporate jets are laughable and an insult to the public’s intelligence. He claims that reverting to a seven-year depreciation schedule would raise an additional $3 billion over 10 years. This is a comparative fly speck. Over the 10 years from 2011-20, the Congressional Budget Office’s base-line analysis projects a cumulative federal deficit of more than $8 trillion. That $3 billion represents three one-hundredths of 1 percent. It’s the equivalent of reducing an $8,000 debt by $3.
(Of course, if this tax incentive really does encourage business jet purchases, killing it will result in lost revenues and jobs for jet manufacturers, meaning lower tax revenues for government.)
Implicit in Obama’s demagoguery is the notion that a corporate jet is a wasteful expenditure. He certainly isn’t shy about the use of his own private jet, Air Force One. Time is money for high-paid business executives with global responsibilities. I’ll leave it to a business and its shareholders to judge if a company jet is a good investment. It’s no more the government’s concern than what a company spends on advertising or how the CEO furnishes his office. A business can only “waste” its own money. Government wastes ours.
From a legal standpoint, forming a corporation is simply one way to organize a business enterprise. It’s a means of limiting liability, establishing a vehicle for financial reporting, issuing stock and paying taxes. Differently organized sole proprietors or partnerships, if successful, may grow into corporations. At what point do they become evil?
When leftists sneer at “corporations,” it’s a code word for the real target of their animus: private enterprise and a free-market economy. In big government they trust.
Freelance columnist Mike Rosen’s radio show airs weekdays from 9 a.m. to noon on 850-KOA.
