According to Bloomberg, the Obama administration has proposed a new $100/flight tax on turbine-powered aircraft. Such airplanes are already subject to a tax on every gallon of fuel used and, if chartered, a 7.5 percent excise tax on the ticket price. The existing taxes tend to favor efficiency. Al Gore’s Gulfstream will pay more than an efficient turboprop or light jet for the same trip. A charter trip in a heavy jet will pay more in tax than a charter trip in a light jet or turboprop. The new tax will do the opposite, imposing the same fee on a Gulfstream and a self-piloted Piper Meridian.
Mostly I’m confused by why anyone would want to create a new tax and associated federal bureaucracy (forms, help desk, inspectors, enforcement, appeals process) to collect it. If the goal is to raise more revenue, why not simply raise the rates on the existing taxes? Do we want our government to bleed us with paper cuts?
Maybe a messaging thing? If it’s per-flight, it can be labeled a “usage fee” or some other pay-to-play thing, which people might perceive as being more fair.
A per-gallon excise tax is going to be a tax no matter how you spin it, even though, as you and all the other letter-groups say, it is a much more effective way to raise revenue. So there would be no way to avoid calling it a tax hike.
“Mostly I’m confused by why anyone would want to create a new tax and associated federal bureaucracy (forms, help desk, inspectors, enforcement, appeals process) to collect it.”
I’m guessing you’re being purposefully obtuse here, because the answer is quite obvious: almost every government employee votes for Democrats, and if they end up in a public employee union, a part of their tax-funded salary is excised for union dues, which ultimately get channeled into political contributions to the Democratic Party.
It’s disappointing that President Obama has gotten so latched onto private jets as his big talking point in his quest to extract more in tax revenue from the wealthy. It is exceedingly unlikely I’ll ever own anything turbine-powered, so I’m not sure why I care, other than that I worry that as business GA goes, so will recreational GA. I just started taking flying lessons (fixed-wing) about a month ago. I’m a little concerned about the wording of part of the Bloomberg article because it seemed to imply that only those single-engine piston flights which did not require air-traffic control services would be exempt from the $100 per flight tax. Here at KSGR for morning flying lessons my CFI sometimes has to file IFR to get us over the early-morning fog and low ceiling so that we can get to VFR on top, which certainly requires the use of ATC services. I would really rather not see my bills for each flight lesson jump by 50%.
More bureaucracy means more jobs.
“Do we want our government to bleed us with paper cuts?”
Do we even have a choice any more? We have a greater number of taxes, and a greater total tax burden, then the colonists did under King George III. In fact, I think the king would have been embarrassed to assess even 1/10th of the taxes we have today.
The Republicans aren’t going to give the President any tax increases, period. As long as there is a divided government, nothing is going to get done, period. The voters are going to hopefully decide in November which party they want to run the federal government and give that party sufficient power to do so. Choosing another divided government will make sure that nothing gets done for another 2 years (minimum), period.
I don’t know how much more in taxes people can pay and survive as free citizens in the USA. Most people knows if you can’t pay your bills, then you need to stop spending. Something seems very wrong and some in Washington seem to want to push it under the rug as if going deeper in debt is needed and O.K.
Why not let the very rich donate money for our country’s debt reduction and in exchange offer them or their company some really great incentives to help them in one form or another? Or let these same people be on a committee to oversee the national budget and spending habits to make sure their donated money is not wasted. We have a lot of brilliant and successful business minds that this job could be offered to. Some have already stepped up and offered their plans to help our country’s debt reduction.
When you think about it – why is it a given that government can propose any kind of a tax without providing their good rationale as part of the proposal?
It’s the difference between a “tax” (which the GOP would instantly demagogue) and a “user fee” (which isn’t technically called a tax). The Republicans have made “tax increase” such a toxic concept that politics now requires dancing around the term when raising revenue — even in this case where the user fee is a much klutzier way to raise revenue (and one that would have more adverse consequences) compared to simply increasing the existing fuel tax.
Remember that the Bush administration tried to put user fees in place too.
Z: As I noted in an earlier posting, I’m not sure why “the Bush administration did this too” is a compelling argument in favor of an action. First, the Bush administration acted under very different circumstances (e.g., apparently strong economic growth). Second, the U.S. was not in such great shape in 2009 that every American would agree that all Bush-era policies should be continued.
Much like Health Care, I believe government should get out of the airspace business. Private companies could bid on specific chunks of US airspace and purchase them outright. They could then off-shore the flight control process to workers in China and India. Those folks NEVER complain about fatigue or stress and could work a more reasonable amount of hours – say 50-60 per week 10-12 per shift – which would drastically improve profit for the parent company. Landing and Takeoff slots would go to the highest bidder. If the airport is busy during peak hours then you might pay $8k or $10K per slot but if you’re willing to schedule your flight on Saturday morning at 3am you could snag a deal. This would give incenctives for airlines to shop around and compare prices – JUST like healthcare.
This would take away the inefficiencies that government brings to ALL of its endeavors while letting the invisible hand guide the aviation industry.
I can’t see any downside…..
cliffie
The wording of the plan regarding this $100 fee is quite vague. Here is an example:
“This proposal would create a $100 per flight fee, payable to the FAA, by aviation operators who fly in controlled airspace. Military aircraft, public aircraft, recreational piston aircraft, air ambulances, aircraft operating outside of controlled airspace, and Canada-to-Canada flights would be exempted.”
When I read ‘recreational piston aircraft’, it makes my head want to explode. There is no such category of aircraft so does that mean that all piston aircraft will have to pay? Sure, a piston aircraft could be used for recreation, but it can also used for many other purposes such as training, business travel, etc. so will each flight need to be assessed for whether it was for recreational purposes? I use my airplane for commuting to work for some clients and have been known to visit several controlled fields in a day. Does this mean that I’d be charged $100 for each leg of a trip that terminated or originated at a controlled field?
Another reference that is subject to interpretation is ‘aviation operators who fly in controlled airspace’. There is very little airspace that is uncontrolled in the U.S. (i.e., class G). So this reference is troublesome too because it covers nearly all flights made in the U.S., even those where ATC services are not required or used.
It’s frightening how impossible this proposal is to interpret. Depending on how it’s implemented, it could completely destroy the GA industry in the U.S..