- People are pointing with anger to a provision in the Senate tax bill passed on Saturday that appears to give private jet owners a tax break.
- The change is actually a technical clarification that prevents operators of private charter flights from being hit with a tax designed for commercial flights.
- Democratic Sen. Sherrod Brown earlier this year introduced a bill with similar language to the changes in the GOP tax bill.
As the American public digests the passage of the Republican tax bill in the Senate, one provision of the bill has seen particular derision Saturday morning.
Opponents of the bill, the Tax Cuts and Jobs Act (TCJA), are pointing to a provision they say gives a tax break to private jet owners.
“Middle class families all over America finally get the tax relief they have been pleading for regarding their private jets,” tweeted Nick Kristof, the New York Times columnist.
“I can’t believe this is real, a tax break for private jet owners,” Roberto Ferdman, a correspondent at Vice, said in a tweet with more than 15,000 retweets as of Saturday morning.
The change is actually technical one. The language of the bill would exempt “aircraft owners” from taxes on the “maintenance and support of the aircraft owner’s aircraft or flights on the aircraft owner’s aircraft.”
But its purpose is to prevent private air charter companies from getting hit with what’s known as the “ticket tax” on flights. The tax was originally designed to apply to commercial flights, while a separate gas tax applied to “general aviation” flights like private charters.
Due to some language confusion in the tax code, however, the IRS began imposing the “ticket tax” on private flights, which has caused a long-running battle between operators of the charter companies and the government. The IRS suspended the assessment of the tax on aircraft management companies in 2013 due to the lack of clarity and the agency dropped a number of audits on these companies in July because it still did not have updated guidance.
The TCJA language is meant to clarify the discrepancy and ensure that the ticket tax is not applied to private flights. According to a letter in 2016 from the Joint Committee on Taxation, the change would lose less than $US500,000 in federal revenue over 10 years.
In fact, the language is similar to a bill introduced by Democrat Sen. Sherrod Brown of Ohio and co-sponsored by Republican Sen. Rob Portman, also from Ohio. Two of the largest private jet operators (which are owned by Warren Buffett) are based in Ohio.
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