Thursday, February 19, 2009

To Gerry Connolly concerning H.B.451

A bill treating a set of aircraft as a luxury subject to luxury taxes. Please do not support this bill. It is completely arbitrary and makes little sense. Consider that a small four-seat Cessna, Sirius or Piper can cost upwards to $350,000. These planes typically cannot hold more than 1200 pounds include passengers, baggage, and fuel. They cannot exceed 18000 feet above mean sea level (most commercial traffic flies above this). Their cruising speed is generally under 200 knots and they do not have bathrooms.

Consider a typical scenario where an executive needs to get from DC to LA (and back) for a meeting without missing half a day of work. There is only one option: use a small business jet. Consider the number of flights companies like Fannie Mae and Freddie Mac performed in a short period of time to get in front of bankers to talk face to face during both restatement and this economic mud slide we are in now. These flights were absolutely critical to keeping people informed and moving bankers away from the panic button. Consider that economics has its own controls.

As costs rise, companies are naturally going to choose those options that best meet their needs, including virtual conference rooms, shared business class commuter flights, and trains that provide overnight services and meeting rooms so entire teams can travel without missing much work.

Consider that ALL major plane manufacturers are suffering. They may not be in the headlines like GM, Ford and Chrysler. However, there loses, relative to their size, are nearly as significant. They do not see themselves in the luxury business, nor should they anymore than someone buying a BMW over a Toyota or Honda.

Consider that this bill has two functions, to try curb corporate spending and to try to raise money. The former makes little sense, as the government's function is not govern corporate spending. Thus, this bill can only be attributed to a government's desire to obtain more money. The government must first look at it's own spending.

There seems to be a cultural shift to blame 'luxury items' (e.g. a plane) as a factor in the economic struggles we know face. A plane is a SMALL (tiny, minuscule) part. You look around the VA area and you can see other parts, like new buildings, large campuses, over-paid executives with large homes.

The best way to battle our crisis is through culture. Build a culture of saving. Build a culture of not supporting products or buying stock in companies with over-paid executes. Build a culture where companies are evaluated on sound business practices. Purchasing a plane, or leasing one, makes sense in many cases. Lets inform the people and let them decide. A new 'tax' bill is not the way to do this.

Thanks.

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