Reality Check: Do all the rich own corporate jets?
(FOX19) - Wednesday's speech by President Obama made it clear that when it comes to dealing with the nation's debt problem, Republican lawmakers need to be willing to raise taxes on the richest Americans.
In the speech, the president said, " If everybody else is willing to take on their sacred cows and willing to do tough things in order to achieve the goal of real deficit to reduction then I think it would be hard for the Republicans to stand there and say that tax break for corporate jets is sufficiently important that we're not willing to come to the table and get the deal done."
What the president may have been referring to is an attempt by some Democrats to close up a tax loophole called "accelerate depreciation." In layman's terms, it is a depreciation method which allows faster write-offs than the straight line method.
Companies with large tax burdens will use it to write-off that might be replaced before the end of its useful life. Some corporations use it for jets, but it is not a "rich person" tax loophole as some would want you to believe, because almost every company in America could use it.
Many smaller companies might use it for computers that might quickly become obsolete, but the President again referred to those corporate jet owners when talking about tax cuts in general.
"If we choose to keep a tax break on corporate jet owners, if we choose to keep tax breaks on oil and gas co's making hundreds of billions of dollars that means we have to cut some kids off getting scholarships, stop medical grants, food safety may be compromised, that means that Medicare has to carry greater part of burden," said the President.
Currently, the move to raise taxes on the wealthy is not talking about only people who make $10 million a year or even $1 million a year.
It's talking about people who make $250,000 a year.
And if the president thinks that people who make $250,000 a year are flying in corporate jets, then he needs a Reality Check.
The new Citation CJ, which is an entry level jet, costs $5 million. The annual operating costs (fuel, hangar space, pilots) are about $500,000.
The cheapest used jets range from $100,000 to $500,000. Annual operating costs (hangar, pilots, mechanics, fuel) are about $1 million a year.
And if we are talking about chartering a jet, that typically runs about $3,000 an hour.
Here's what you need to know:
Someone earning $250,000 a year might spend 5% to 10% of their annual income on a single flight by chartering a jet, in which case we could call them "corporate-jet fliers."
But it is very unlikely.
If the president wants to see those tax levels raised for people making $250,000 a year and up, let's have a debate that accurately portrays who those people are.