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Don’t Call It Tax Reform: It’s Just Tax Cuts

Republicans are describing their effort to change America’s tax laws as “reform,” but their proposals are really just one more giveaway to the top 1%, which gets 80% of the benefits of their plan. It’s time to call it what it is: tax cuts for the rich, because it sure isn’t reform.

Reform would entail a robust discussion of closing major loopholes such as those that exclusively benefit millionaires and billionaires. There are scores of egregious examples, but I will just focus on one of the worst today: a billion-dollar loophole that forces working class taxpayers to subsidize the air travel of affluent private and corporate jet owners. That’s right: when Jamie Dimon flies off to the Cayman Islands to check out deals on how to avoid taxes by opening up PO boxes, you are subsidizing his trip. 

These wealthy travelers are the recipients of a major subsidy from taxpayers because of the way America’s aviation infrastructure is funded. All planes, from 200 seat commercial airliners to six passenger private jets, utilize federal resources to safely guide them from takeoff to landing. Yet while high-end private aircraft account for 10 percent of the cost of our nation’s air traffic control system (ATC), for example, corporate and private jet owners contribute less than 1 percent towards the FAA’s Trust Fund in the form of a relatively insignificant fuel tax.

With private plane owners contributing so little, who picks up the difference? A look at your last airfare ticket receipt will give you the answer. All commercial airline passengers pay a 7.5 percent excise tax and a $4.10 fee on every plane fare — charges that private jet owners don’t have to pay. These taxes and fees go to the Airport and Airway Trust Fund (AATF), which finances the FAA and pays for air traffic control operations.

It is these and other airline fees and taxes that provided $15 billion of the FAA’s $16.4 billion total budget this past fiscal year. Because of their exemptions, corporate and private jet owners contribute just $179 million to the FAA for using the exact same air traffic control resources. That’s less than one percent of all aviation taxes, even though 10 percent of all ATC costs are driven by high-performance private and business aircraft.

To better understand the disparity, let’s imagine two flights — one a commercial passenger plane and the other a corporate business jet — taking off from Nashville and heading to Philadelphia. A recent analysis by Bloomberg News found that the commercial flight would typically pay more than $2,000 in taxes and fees while the corporate jet flying the exact same route would only pay about $50 in fuel taxes. Even though each utilized the exact same air traffic control resources, private jet passengers pay just a fraction of the cost for the services.

The Trump administration is trying to sell taxpayers on the idea that cuts to wealthy individuals and corporations will spur economic growth. But when it comes to funding for our nation’s aviation system the middle class is covering the cost. The only solution is to have high-end plane owners pay their fair share. 

So if Republicans are interested in framing their tax proposals as reforms, they should focus on closing loopholes like these which could add billions to the Treasury and pave the way for a more equitable tax system.  Without actual reform, this proposal is nothing more than just another giveaway for the wealthy and not the “middle class miracle” Trump promised.

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