Juniper Times

Latest News Magazine

Business Aircraft and Tax Depreciation Politics in the Age of Big Government Spending

In my younger days, I had an aircraft washing service, and I also sold aircraft. This was back in the very early 80s, and I remember that the luxury tax had ended, and the Federal Government modified the depreciation for general aviation aircraft. This killed many industries, such as the yacht building manufacturers, and those that built corporate Jets and private aircraft. Tens of thousands of jobs were lost throughout the country during this period.

General aviation had never rebounded, and it was coupled with other problems during that decade and the one that followed. Of course this wasn’t the only problem. Lawyers had also found a way to sue aircraft manufacturers for nearly any type of aircraft accident suing the aircraft manufacture, even when it was pilot error. These finished product liability lawsuits caused the cost of aircraft to skyrocket, and ever since then; between 40 and 60% of the cost of a new aircraft is merely to pay for insurance against those lawsuits or the legal costs.

Because aircraft cost so much, later the tax depreciation rules were changed back again, allowing people to highly depreciate the aircraft in the first few years, as it would be worth quite a bit less as soon as you “flew it off the ramp” and since a lot of that cost for a new aircraft had to do with increased regulations, and finished products liability lawsuits, that’s where we still are today. Now, some politicians want to change the rules back to the 1980s rules that had killed general aviation and slammed the industry killing manufacturing jobs.

There was an interesting article in Aircraft Maintenance Technology last month titled; “NBAA Blasts President Obama’s Comments Regarding Business Aviation” published on June 29, 2011 where Ed Bolen the President of the NBAA (National Business Aviation Association) said he was pretty upset that the Obama Administration choose to “vilify and mischaracterize business aviation” and the article went on to state:

“This is an industry that is critical for citizens, companies, and communities across the U.S., and one that can play a central role in the economic recovery he says he wants to promote, after the Obama’s remarks concerning tax policies for general aviation (GA) airplanes. Obama denigrated business airplane owners and operators, apparently to make a case that current tax “depreciation schedules” for GA airplanes are too short, and should be lengthened.”