Heritage Lies About Origin Of Tax Breaks For Jets

June 30, 2011 12:01 pm ET — Alan Pyke

a Gulfstream IV jet, via flickr user sdasmarchivesJudging by their Twitter feed, the Heritage Foundation really wants you to believe that President Obama "created" a tax break for private jets in "his own stimulus." But the charge is undercooked, and if Heritage investigative reporter Lachlan Markay had taken a real look at the Recovery Act's tax provisions rather than spitting up the first convenient Associated Press article he "investigated," he would know this doesn't make sense.

First, the tax break in question was "created" in 2002 by Sec. 101 of the Job Creation and Worker Assistance Act of 2002, which added the tax breaks for "transportation property" to the federal tax code as part of a new subsection, 168(k). (Sec. 103 of the Economic Stimulus Act of 2008, also not Obama's brainchild, modified the purchase dates to which 168(k) applies.) Second, the Recovery Act extended the time window of section 168(k), but "transportation property" is only one of a broad range of corporate purchases to which the subsidy applies. Nobody in this administration "created" this tax break, and the Recovery Act's extension of business tax relief was not nearly so specific as Heritage pretends.

So there's nothing hypocritical about President Obama criticizing tax breaks for corporate jets, and it's telling that Heritage doesn't engage the actual argument the president was making. Matt Yglesias explains why this provably false charge is likely just the beginning of a broader strategy:

We may be in for a dozen rounds of this kind of myth-making. The White House has put on the table the idea that we should raise tax revenue without necessarily raising tax rates. That means closing loopholes. But congressional Republicans say they're opposed to any increases in tax revenue. Now everyone knows that the tax code contains lots of unjustifiable loopholes, so the White House can gain a strong rhetorical upper hand by highlighting specific loopholes. Since the GOP has committed itself to defending each and every loophole no matter how absurd they're going to need to engage in a lot of desperate smokescreens like this to avoid engaging directly with the core question.

The right's anti-tax zealotry is so fierce that the GOP walked away from a 5-to-1 ratio of cuts to taxes in the debt talks with the White House, and any GOPer who dares acknowledge that raising revenues by closing loopholes is a good idea gets the full force of Grover Norquist's wrath. With revenues at a 60-year low thanks to the failed Bush tax cuts and the recession, that's an irresponsible public policy stance.

Heritage and the rest of the right-wing machine are welcome to be irresponsible. But that doesn't permit them to make things up. If they're honest, they'll issue a sweeping correction acknowledging their charge that President Obama "created" a tax break from private jets is utterly false. Too bad — for a second, it was nice to think that the right might finally acknowledge that the Recovery Act was loaded with tax cuts.

UPDATE: The tax extension deal President Obama made with Republicans in December jumped the deductions allowed under section 168(k) to 100 percent of a business's investment in various properties without modifying the underlying language about what is deductible. The president cited the corporate jets writeoff repeatedly yesterday to emphasize that by taking all tax loopholes off the table in these debt talks, Republicans are risking American economic growth to make an ideological point.