Monday, July 11, 2011

Losing On A Jet Plane

Okay, poor people, listen up: the Grand Old Party does not care about you. They want to cut Medicare and Medicaid, and are toying with extending the retirement age for Social Security. President Obama wants to raise taxes on the rich and do away with some tax loopholes - on the rich. The change in the depreciation of corporate jets vs. healthcare. Hmm. 
  1. In 1987, Congress included a provision in the tax code that would allow corporate jets to be depreciated over a  five-year period rather than the seven-year period required for commercial aviation. This is one of the revenue increases that President Obama is pulling for while Sir John of Orange defends it, as part of his whole "don't raise taxes on job creators."
  2. On October 21, 2010, Oklahoma's own climate change denier Sen. James "Big Oil" Inhofe landed his twin-engine plane on a clearly marked, closed runway at the Cameron County (Texas) Airport.When confronted by the supervisor of construction that was going on at the time, Inhofe said, "'What the hell is this? I was supposed to have unlimited airspace.'” After completing a required 4-hour remedial training course, no legal action was taken against him. Even though airport manager Marshall Reece said this: “I’ve got over 50 years flying, three tours of Vietnam,” Reece said, “and I can assure you I have never seen such a reckless disregard for human life in my life.” He then added, “Something needs to be done. This guy is famous for these violations.” Rather than show contrition, "Today I am pleased to introduce the Pilot’s Bill of Rights. Over the course of my years in Congress, I have helped an untold number of pilots facing the pressure of dealing with the Federal Aviation Administration (FAA). This bill remedies many of the most serious deficiencies in the relationship between general aviation and the FAA, and ensures that pilots are treated in a fair and equitable manner. One of the reasons I got into politics was to fight for the everyday citizen facing an uphill battle with bureaucracy, and that’s why I’m so pleased to introduce this legislation—it’s a mixture of my love of flying and pilots and my job of legislating for the people.” 
  3. Ending special deductions for the depreciation of corporate jets would raise an estimated $3 billion in tax revenues — or, as the jet manufacturers point out, a fraction of one percent of the deficit the country is facing. So, it's more a symbol than a real cut. But, jet industry officials have begun an email campaign, suggesting dropping the deduction would lead to job loss and reduction in jet production.
  4. On nytimes.com last week, columnist Nicholas D. Kristof identified a loophole Boehner et. al. refuse to close. "This carried interest loophole benefits managers of financial partnerships such as hedge funds, private equity funds, venture capital funds and real estate funds — who are among the highest-paid people in the world. John Paulson, a hedge fund manager in New York City, made $4.9 billion last year, top of the chart for hedge fund managers, according to AR Magazine, which follows hedge funds. That’s equivalent to the average per capita income of 184,000 Americans, according to my back-of-envelope calculations based on Census Bureau figures. Mr. Paulson declined to comment on this tax break, but here’s how it works. These fund managers are compensated mostly with a performance bonus of 20 percent or more of the profits they make. Under this carried interest loophole, that 20 percent is eligible to be taxed at the long-term capital gains rate (if the fund’s underlying assets are held long enough) of just 15 percent rather than the regular personal income rate of 35 percent.
     

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