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Fri, Mar 22, 2013

Kansas Lawmakers Buck Obama On Aviation Tax 'Loophole'

Even Some Democrats Disagree With The President's Anti-Aviation Rhetoric

After seeming to do everything it could to assure that the Detroit automaking industry was able to survive the recession, Kansas lawmakers, including some Democrats, are scratching their heads over rhetoric coming from the White House concerning corporate aircraft.

Wichita Mayor Carl Brewer is one such Democrat. Though he displays a portrait of the President on the wall of his office, he's been a vocal advocate of maintaining the jobs that produce the business jets and other airplanes which seem to be one of the President's favorite symbols of corporate excess. "As long as you're doing something to threaten my aviation industry ... I'll continue to speak out against it," he told Reuters.

Statistics indicate that the aviation manufacturing industry employs 1.2 million people, many of them union members, and exported nearly $5 billion worth of airplanes last year. Representative Mike Pompeo, a Republican, said that the industry does not want a bailout, just recognition that they are an important creator of jobs in the country. Just "stop bashing them," he said.

But the White House and its allies continue to say that offering accelerated depreciation on assets like airplanes ... the "loophole" that President Obama so often said he wants to close ... and budget items like nutrition programs for poor children and pregnant women are an "either/or" proposition.

Those airplanes, however, are built by people who may never buy one ... though the average wage of an aircraft manufacturing worker in Wichita is $74,000. Reuters says that's nearly twice the regional average. The city produces almost 50 percent of all of the private aircraft built worldwide.

The depreciation schedule that President Obama calls a "loophole" covers hard assets like bulldozers and and computers as well as airplanes ... and has been in place for years. But the "corporate jet" apparently has become the President's favorite target when he wants to point out what he sees as "corporate excess."

Aviation analyst Brian Foley says that stretching the depreciation schedule from five to seven years would not make or break the industry, but others say just the rhetoric from the White House has already hurt the industry. Businesses are reportedly putting off buying airplanes as they wait to see how the tax fight plays out.

Fewer airplane sales means fewer airplanes being built and a need for fewer workers to build them. The ripple effect can be felt at car dealerships, grocery stores, and other small businesses that depend on those workers in Wichita to consume their goods and services.

FMI: www.whitehouse.gov

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