The tax break on corporate jets that President Barack Obama mentioned six times during his speech on reducing the deficit amounts to mere peanuts, experts say.
"If you buy an expensive item for your company, a large piece of equipment like a copy machine or a building, for example, the IRS has a depreciation schedule so that you can write it off as a business expense, but not all at the same time," Kent Jackson of jet law firm Jackson & Wade told The Business Insider.
For buildings, says Jackson, companies get about 19 years to write off the expense. For planes, it's currently 5 years. Eliminating the break would extend that break to seven years, which experts say wouldn’t generate much tax revenue, if indeed any at all.
|President Barack Obama
(Getty Images photo)
Obama’s comments were “just about extending the depreciation schedule-the time period over which corporations can write off the purchase of a corporate jet-from five years to seven years," Jackson says.
Hardly a huge change, especially since most corporations usually own many jets — in fact, according to Jackson, three jets would constitute a huge fleet.
At $60 million per high-end jet, that would add very little to the bottom line of any company large enough to have three private jets.
Moreover, if the company charters its plane out while it's not in use, it already has to write the expense off over seven years instead of five.
The Wall Street Journal reports that most of the people who would be subject to the higher taxes the president wants aren’t likely to be private-jet owners because those who earn $250,000 a year – among those scheduled for a tax increase in 2012 – is unlikely to be able to afford even a few charter trips on a jet.
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