Governor Deval Patrick’s proposed new aircraft sales tax for Massachusetts has been passed by our House and denied by our Senate. The decision will now rest with a conference committee.
At first glance this would appear simply to be a jobs creation bill for New Hampshire, Connecticut, and Rhode Island, sending airplanes, hangar construction, maintenance, and pilot jobs over the borders. It also looks like a revenue reduction bill since (a) nobody buying a $10 million plane would be dumb enough to base it in Massachusetts and pay the tax, and (b) all of people who would have been employed in the care and feeding of that $10 million plane will now become residents of other states and therefore will stop paying income tax, sales tax, and property tax here in Massachusetts.
A deeper look reveals how destructive this bill will be to the environment. Let’s look at noise first, a common complaint of those who have recently built houses near long-established airports.
Scenario 1: Jet lives in MA. Owner drives to airport, takes off for West Palm Beach, hangs out with rich pals, returns to MA. Jet is tugged into hangar. Takeoffs in MA: 1. Landings in MA: 1.
Scenario 2: Jet and its crew of pilots, flight attendant, and mechanics all live in Nashua, NH and pay taxes up there. Owner drives to his local airport in MA where the plane is waiting for him. He flies to West Palm and back. The jet returns to NH. Takeoffs in MA: 2. Landings in MA: 2. Twice as much noise plus some extra fuel burned for the additional 10 minutes of flight time each way.
Now let’s look at fuel consumed and CO2 emitted.
Joe Average: Joe and his three friends are going to buy a new four-seat airplane for $300,000 and share it. They had planned to keep it at Hanscom Field despite the high fuel prices and expensive hangars. Faced with the new tax, however, they decide that the plane should live in Nashua, NH. The tax savings alone will pay for four years of hangar up there and they only plan to keep the plane for four years before upgrading to something with higher performance to match their increased flying skill. Fuel and maintenance will be cheaper as well. Every time they go flying, however, Joe and his friends will drive an additional 60 miles round-trip to get to the plane and back home.
Generic Company: Despite facing some of the nation’s highest labor costs and most onerous regulations on business, somehow this mid-sized company has managed to hang on in the blighted crack-house dominated town of Springfield, MA. All of their competitors have moved to South Carolina and Kentucky or overseas. Generic has offices and operations in six other states and keeps a 15-year-old jet here at headquarters for when it needs to send teams of people out to meetings (neither Springfield nor any of its other locations are served by commercial airlines). The jet is very noisy by modern standards and also rather thirsty. Generic has been considering upgrading to a quieter airplane that burns half as much fuel, but the payback period would be 5 years because they don’t fly many hours per year. When Deval Patrick’s new tax takes effect, Generic runs the numbers again, concludes that the payback period would now be 8 years, and decides to fly the airplane for 10 minutes to tax-free Connecticut for repainting and new carpet and upholstery. Generic will be inflicting a lot more noise on neighbors with its old jet and burning twice as much fuel as if they had upgraded.
If passed, this tax is going to be remembered as another nail in the coffin of central and western MA. Eastern Massachusetts does okay no matter how incompetent our government. Harvard and MIT have accumulated more than $50 billion dollars in wealth. There are a lot of businesses that need to be near Harvard and MIT. People come up from Manhattan fighting for the chance to pay $10 million for a beach house on Nantucket and then to pay property tax on that house for the rest of their lives. If the City of Cambridge can’t figure out how to teach kids reading and arithmetic for $15,000 per year per kid, Buffy and Chip can be sent to private school.
What have they got going in Worcester and points farther west? Big airports and a tradition of skilled craftsmanship. With Governor Patrick’s new tax, they’ll have to look somewhere other than aviation for new jobs. Maybe they can compete with northern Kentucky for the next Toyota factory…
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