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US President Barack Obama has said the US should eliminate tax breaks on corporate jets at the first presidential debate of the 2012 election in Denver.
Ed Bolen, president and CEO of the National Business Aviation Association (NBAA), has issued a press release condemning his comments about corporate jets.
During a section of the debate discussing ways of cutting the US deficit, Obama suggested raising corporate taxes. He said: “The oil industry gets $4 billion a year in corporate welfare. Basically, they get deductions that those small businesses that Governor Romney refers to, they don’t get.”
He added: “Now, does anybody think that ExxonMobil needs some extra money, when they’re making money every time you go to the pump? Why wouldn’t we want to eliminate that? Why wouldn’t we eliminate tax breaks for corporate jets? My attitude is, if you got a corporate jet, you can probably afford to pay full freight, not get a special break for it.”
Obama was referring to the accelerated depreciation of business jets. Under accelerated depreciation companies that use business aircraft are able to depreciate the cost of their aircraft over five years rather than seven years. The Democrats believe that cutting depreciation to five years, in line with charter companies and airlines, would raise $3 billion over 10 years.
Republicans believe that the accelerated depreciation – a policy in Obama’s own 2009 stimulus plan – encourages sales of aircraft which helps US business jet manufacturers and creates jobs.
Following the presidential debate, the NBAA issued a press release condemning Obama’s comments. “At a time when both candidates claim to be putting job creation at the top of their agenda, it’s unfortunate that the President tonight denigrated the business aviation industry, which is responsible for 1.2 million American jobs and $150 billion in economic impact,” said Bolen.
He added: “The President’s comments completely mischaracterized the businesses and groups that depend on an airplane, the majority of which are small-to mid-sized businesses, farms, flight schools, medical care providers and emergency responders that use the aircraft to connect communities and grow their businesses. That’s why dozens of governors have recognized the industry’s importance, and over 100 Mayors have written the President to ask him to stop attacking it at a time when many businesses and communities are still recovering from the economic downturn.”
Manufacturers and brokers say that many US buyers have delayed buying corporate jets because of uncertainty surrounding the US presidential election, which takes place on November 6.
In June 2011, Obama attacked accelerated depreciation on corporate jets six times in one press conference.