...As Executive Perks Are Once Again a Focus
It's been a while -- the 1980s, to be exact -- since any major action by Congress or the IRS to address what some perceive as abuses of business aircraft by the businesspeople who ride in the back. Our third example harks back to Reagan-era tax-reform legislation, which gave the industry terms like "personal use" and "empty-seat"; both common non-business uses of company-provided transportation were targeted as fringe benefits during that time frame as Congress clamped down on perceived tax-code abuses, if not the perceptions themselves. But, according to U.S. Rep. Rahm Emanuel (D-Ill.), there's a $3 billion corporate jet tax-shelter loophole in the U.S. tax code as a result. Naturally, Emanuel has introduced a bill to address the situation. According to the congressman, businesspeople who fly aboard corporate jets for personal reasons are charged about half the price of a round-trip first-class ticket from New York to Los Angeles. Meanwhile, the company takes a full tax deduction for owning and operating the plane. Emanuel says the stark difference -- $300 to the traveler versus the $30,000 operating-expense deduction -- is a loophole and he wants it closed. The Chicago-area congressman introduced a bill, the "Corporate Jet Tax Shelter Reform Act of 2004" (H.R.4352), on May 11 that would limit the company’s deduction only to the actual amount of income imputed to the executive. It's not likely to go anywhere in the current Congress.