Obama: Corporate Jet Taxes, Airline Passenger Fees To Aid Deficit Reduction

WASHINGTON -- President Obama's deficit reduction plan calls for raising fees on corporate jets and airline passengers as part of $1.5 trillion in new revenue over the next 10 years.

In a proposal certain to have the corporate jet industry lobby working overtime, the Obama administration's blueprint calls for raising the per-flight fee on private jets from $60 to $100. The White House said the increase would generate an estimated $11 billion over the next decade.

In arguing for the higher fee, the administration noted that about two-thirds of the federal air traffic control system's costs are financed by aviation excise taxes. Yet a large commercial aircraft currently pays between $1,300 to $2,000 in taxes for a flight from Los Angeles to San Francisco while a corporate jet flying the same route and guided by a similar level of service from Federal Aviation Administration air controllers, pays about $60.

The levy on corporate jets comes as no surprise: Obama has made the industry a favorite whipping boy in recent months in arguing against tax breaks for the rich. Still, a similar proposal by President George W. Bush was turned down in Congress under pressure from the corporate jet lobby.

The White House may find another proposed tax hike less popular with the public, though. Obama's plan would tap deeper into consumers' pockets with a 50 percent hike in the aviation passenger security fee currently tacked on to every airline ticket.

Enacted soon after the Sept. 11, 2001 terrorist attacks, the fee was originally intended to fund the entire Transportation Security Administration budget. In reality, it covers just 43 percent due to rising costs over the last decade.

Obama's proposal to raise passenger fees, which was modeled on Rep. Paul Ryan's 2012 budget proposal, would replace the current $5 maximum fee per one-way trip with a $5 minimum. It would then increase the tax by 50 cents each year until it reaches $7.50 in 2017.

The White House said the higher passenger fees would bring in an estimated $8.8 billion in additional revenue over five years, and $24.9 billion over 10 years. Of that, $15 billion would be skimmed off for debt reduction.

Comments

[independentcynic1228]

04:27 PM on 09/20/2011

So are they going to keep this revenue in the FAA budget or put it into something else. That's the real concern I have. And the government seems to have a way about collecting taxes for one thing and siphoning it off to something else (social security anyone). If this is going to pay for the FAA to help modernize our air traffic system or pay for AIP grants and such, then by all means do it. But for some reason I have a feeling most of this money is going to end up in a slush fund for someone's pet project meanwhile our ATC system and airports continue to age and crumble.

[FactsvsFear]

11:45 AM on 09/20/2011

So the GOP says the regular airline industry that we all use should pay a thousand bucks more for this fee than a private jet firm or owner that 000000000.1% of the richest of our county uses. The GOP actually defends this? Wow. I know a private jet owner I really do. He is my Uncle and he is very wealthy and has zero problem with this. Why are we only hearing from rich people who say yeah we can pay more for things we are crazy rich. Where are the rich complaining about their poor millions? All they could get was a GOP congressman to cry about how his 50,000 plus bucks a month is not enough to live. It's because these greedy people are very very few a couple of family's like the Coke head brothers who are ashamed to show their faces. It's actually a coupe of billionaire family's the GOP is putting over the entire country. You GOP voters are strange ducks.

[riverhouse]

11:07 AM on 09/20/2011

Who cares if a preflight fee goes from $60 to $100 for private planes? Seriously, who cares? Who cares if a passenger ticket to fly is increased by $2.50? Our nation's ability to function is threatened and the Tea Baggers act like children throwing a tantrum.

[Blufftonian]

08:17 AM on 09/20/2011

I wonder why this article didn't cover the other "contribution" increases that were mentioned in this piece:

"It's not just millionaires who'd pay more under President Barack Obama's latest plan to combat the deficit."
http://finance.yahoo.com/news/New-government-fees-pepper-apf-4120540659.html?x=0&.v=2

[grope and change]

08:11 AM on 09/20/2011

Hey Dems's do only the truly rich fly? Looks like Obama is hitting the little guy now too with a 50% increase on security to fly. Don't worry though no one will press him on this and most of Obama's base won't buy a plane ticket unless it's subsidized.

[traceymarie]

12:50 PM on 09/20/2011

In 2017 this "hit" will be $17., the horror.

[authorized-user]

07:54 AM on 09/20/2011

Aircraft flown in the USA should be serviced only in the USA to create jobs.
No more shipping them out to 3rd world countries for un-certified maintenance, faulty "refurb" parts, and bogus records.
This is better than whacking them with more taxes.
Currently, the airlines are letting their domestic maintenance centers go dark and firing their most capable techs.
Taxes aren't always the answer. Fund the FAA correctly to end this shell game.

[traceymarie]

12:52 PM on 09/20/2011

actually, the line matienence and heavy matienence is done at the airlines hubs. They even send their mechanics to whereever the broken plane is for a work trip. Basic maintenience is still done primarily in the states, we do fly overseas so some contract workers are needed.

[MUDPUPPY]

06:09 AM on 09/20/2011

Our aircraft production industries employ thousands more that are union than the auto industries . Wait till Obama affects their production and causes layoffs.

[traceymarie]

12:52 PM on 09/20/2011

How?

[JAT3]

03:41 AM on 09/20/2011

Its really who cars with the airlines! A company shouldnt be operating so close to the redline! After all the decades in business where as the tax cuts, and incentives gone? Rarely have any of it been put back in the system. Any upgrade have been on the FAA/Govt side for efficiency for the benefit of all. Only recently new airlines or smaller carries have come in with cheaper flights/deals.

The airlines or much like banks. They will charge more from window seat to how AC you can use. Just watch! There should be no bailout for those that can't figure out a way to run more efficient. Because flying is only going to become a thing for those by necessity, business or have the income excess.

[skystone]

01:27 AM on 09/20/2011

I can barely afford to fly and visit family now, particularly with the added baggage fees, and now I am supposed to pay more? Why not let those traveling for business pay more instead of those of us who scrimp, save and sacrifice just so we can visit family?

[grm1984]

03:21 AM on 09/20/2011

It would go from $5 to $7.50 gradually over the next 8 years. It's not a huge change. Or even a noticeable change for that matter.

[its miller time]

03:31 AM on 09/20/2011

You have to wonder if people really read past the headlines anymore.

[glockman]

09:02 AM on 09/20/2011

Yeah, it's never those modest increases in taxes and fees that nickel and dime the middle class to death.

After all, it's not like a few pennies here, a few dollars there added to every existing utility and purchase made by the middle class adds up, is it?

[Jesse P. Steinberg]

11:04 PM on 09/19/2011

Departure tax from Montreal is $25. So Americans should count their blessings. The highest anyone would pay in Canada in a departure tax is somewhere in New Brunswick which is $40. Which falls under "Airport improvement fees"

The list of what Canadians have to pay to fly inside or outside of the country: http://www.aircanada.com/shared/en/common/flights/pop_surcharge.html

[freili]

10:49 PM on 09/19/2011

Introduce a luxury tax .....on private jets, yachts, private tennis courts, private indoor swimming pools.

[LogicMonger]

09:14 AM on 09/20/2011

Are you THAT upset at yourself for being such a failure ?....

[lulubelle1956]

10:38 PM on 09/19/2011

LOL! Paul Ryan must be you-know-whatting in his pants! LOL!

[June25]

10:15 PM on 09/19/2011

Not that it matters but the pitcher included of a corporate jet is actually a turbo-prop hence the propeller in back of the engine.

[HaeJee]

10:14 PM on 09/19/2011

Poor individuals that have to pay more for private jets...... while millions have lost their jobs, thanks to Bush thinking about baseball.

[indiecratublican]

07:59 PM on 09/19/2011

Well, kudos to Paul Ryan for coming up with this idea (not really)- now will he and his other GOPers vote for it? Or will they denounce it since it's coming from Obama? Hmm...