Says Obama, Congressional Democrats Moving Quickly To Remove Accelerated Depreciation Structure for GA Aircraft

A very serious matter affecting general aviation and the rotorcraft industry has now been elevated to the leadership level in both the House and Senate. General Aviation manufacturing tax incentives, such as accelerated depreciation, have now come under attack from President Obama and House and Senate Democratic leaders and could be scrapped as part of a debt limit bargain between Congress and the White House. At his Wednesday June 29 White House Press Conference, Obama  called on Congressional Republicans to show flexibility on revenue increases as the August 2 deadline for raising the debt ceiling approaches. At least five times during his speech, Obama invoked tax breaks for corporate jets.

Democrats now see elimination of tax breaks and a change to the depreciation schedule for general aviation aircraft as politically attractive. While all the current rhetoric appears to be directed toward “corporate jets”, any change to the depreciation schedule would apply to pistons, turboprops and rotorcraft.

Senate Majority Leader Harry Reid (D-Nevada) took to the Senate floor on Tuesday to accuse his Republican colleagues of walking away from debt talk negotiations “to save and protect tax breaks for wealthy oil companies and corporate jets”, this a day after he had met privately with President Obama. Reid also took to the Internet via his Twitter account, tweeting that “Rs are living in a fantasy world, protecting tax breaks for corporate jets and yachts when we need to reduce deficit  #WrongPriorities.”

Current law temporarily allows 100 percent depreciation in the first year for business equipment, including commercial and general aviation aircraft, but that provision is slated to expire at the end of 2011. It is highly likely given the attention tax breaks are receiving in the press this week that both political parties could agree to what they would call revenue increases, which would be to increase government revenues without actually raising any tax rates by eliminating certain tax deductions.

Changing the depreciation schedule for general aviation aircraft will negatively affect every segment of our industry, jeopardizing over 1.2 million jobs throughout the United States. This type of targeted legislative “solution” will lead to further economic difficulties, will punish middle class workers, and result in a significant detrimental effect on our industry. The current depreciation schedule for general aviation aircraft has allowed general aviation manufacturers to maintain skilled US jobs and strengthen our ability to compete globally.

Removing the accelerated depreciation structure for general aviation aircraft will not have any significant effect on the growing US debt problem. The general aviation industry contributes over $150 billion to the US economy each year, and general aviation aircraft are an essential part of our transportation system supporting many small and medium sized businesses and supporting hundreds of engine, avionics, and component manufacturers which are also small businesses.

HAI is urging members to take action while this issue is fresh. They are asking for help getting the message to Washington to let them know this is an ill-advised tax effort for which they are unaware of the negative consequences that will compromise our industry, affect employment numbers across the nation and in their congressional district/state and weaken a domestic manufacturing industry that contributes soundly to a positive trade balance.

Elected officials need to clearly understand that these type of actions will not only effect the helicopter industry but their constituents as well. Such a negative economic impact on daily helicopter operations will constrain our ability to deliver the many critical services we perform on behalf of the greater good, such as EMS flights, aerial firefighting, law enforcement, search & rescue, power line and utility repair, along with other missions in support of the national energy infrastructure.

The U.S. House of Representatives is in recess this week, and the U.S. Senate will be out of town next week. Members of Congress will be in their Congressional Districts and face to face meetings and phone calls, faxes, and emails to their offices are extremely important at this time. To obtain contact information for your Senator, visit www.senate.gov and follow the links. To contact your elected Congressman or Congresswoman, visit www.house.gov. If you need additional assistance, contact Brian Spittler, HAI Government Affairs assistant at brian.spittler@rotor.com.

FMI: www.rotor.com