By now, perhaps, you've seen the video of the embarrassing moment for auto company executives when they went before a Congressional panel, asking for a $25 billion bailout of their industry a few weeks ago. Members of Congress upbraided the officials for using company jets to fly to Washington.
"There's a delicious irony in seeing private luxury jets flying in to Washington, D.C., and people coming off of them with tin cups in their hands saying that they're going to be trimming down and streamlining their businesses," said Rep. Gary L. Ackerman (D-N.Y.) "There's a message there."
"Those type of symbolic things, they really matter, they set a tone," said Rep. Peter Roskam (R-Ill.).
"I'm going to ask you to raise your hand if you are planning to sell your jet in place now and fly back commercial. Let the record show, no hands went up," said Rep. Brad Sherman, D-California
True enough, and why would they? Who provided the incentive for businesses to make money via tax breaks for buying the jets in the first place?
Ackerman, Roskam, Sherman, and 382 other members of the House who voted for the Economic Stimulus Package of 2008, which carried this section:
(a) In General- Subsection (b) of section 179 of the Internal Revenue Code of 1986 (relating to limitations) is amended by adding at the end the following new paragraph: `(7) INCREASE IN LIMITATIONS FOR 2008- In the case of any taxable year beginning in 2008-- `(A) the dollar limitation under paragraph (1) shall be $250,000, `(B) the dollar limitation under paragraph (2) shall be $800,000, and `(C) the amounts described in subparagraphs (A) and (B) shall not be adjusted under paragraph (5).'. (b) Effective Date- The amendment made by this section shall apply to taxable years beginning after December 31, 2007.
Company officials, like the auto industry ones, can expense a new jet up to $250,000 and can also take a 50-percent bonus in depreciation in the first year of ownership. That's a big pile of cash.
At least in this case, the business practices members of Congress criticize are the ones they encouraged in the first place in the name of economic stimulation.
I don't want to appear like I condone the recent behaviour of auto execs, but this kind of factual cherry picking makes me quite uneasy.
I know they wouldn't do it, but it would have been funny if the execs replied, no, it is cheaper for us to keep the jets because of tax code you passed. It wouldn't have made them look any better, but it would make Congress look idiotic.
Like that is difficult.