The tougher tax treatment of jet owners will inevitably lead to less use of these corporate jets. What the nation gets in direct taxes against corporate CEOs it loses in the reduced profits of the businesses that no longer use corporate jets as they once did. For a variety of reasons, this method of transportation is a lot cheaper for corporate officials, who have the option of chartering out the services of corporate jets from sites such as Luxury Jets, which offers “empty leg” specials that help boost the productivity of its own air fleet. Corporations look to their bottom line far more efficiently than the United States government looks to its. Thus, corporations seek out low cost solutions that are not possible for a presidential entourage for whom security is the highest and best good.
We can now see the primitive economics that lie behind the presidential rhetoric. First, it is not possible to gain more money for the public treasury by taxing heavily those practices that are efficient for a firm. Putting a special tax on corporate jets will cut corporate profits, leaving nary a dime to fund the worthy causes that the president promotes. To repeat a constant refrain, taxation policies that are unsound in good times do not become sound in bad times.
Second, the president always seems to be making the wrong either/or choices. There is no connection whatsoever between the use of corporate jets and the awarding of scholarship money. The correct way to think about such a tradeoff is to ask this question: is allotting tax dollars to one type of venture preferable to allotting it to another?
The president’s failure to compare different expenditures matters, big time.