Mar 23, 2016

Congress Must Reject Using Aviation Bill to Pass Special Interest Tax Carve Outs

Post by Paige Agostin

Election years are known in Washington for little legislating and lots of campaigning. As a result, there can be limited opportunities for lobbyists to get their favored projects and handouts passed into law.

Generally speaking, this is a good thing for the American people. Unfortunately, news reports indicate that the funding authorization for the must-pass Federal Aviation Administration (FAA) is starting to look like that opportunity. Because the FAA’s authorization raises revenues through airline ticket sales, fees and fuel taxes, the bill allows the Senate to include other tax provisions in the legislation. This makes it a prime target for lobbyists to attach special-interest tax provisions.

Adding unrelated tax provisions to an FAA bill is exactly the kind of cronyism that Congress must resist. As an example of just what these tax breaks might entail, the Joint Committee on Taxation published a list of more than 30 tax provisions that expire this year. Expiring provisions include handouts for Hollywood, racehorse owners and motorsports entertainment complexes. One expiring tax break is the railroad track maintenance credit by which companies can offset up to 50 percent of track repair and maintenance costs.

Unable to enact a long-term authorization bill before the current FAA authorization expires on March 31, Congress passed and sent to the president this week a short-term FAA extension that runs until July 15. As debate over a longer-term FAA bill continues, Congress must reject any attempt to extend unrelated tax benefits known as “extenders,” which distort markets, hurt consumers, make real tax reform more difficult and make Congress beholden to corporate lobbyist at the expense of sound policy.

Make no mistake, the U.S. tax code needs reform. American corporations pay the highest rates in the world, reducing our international competitiveness. But a shortsighted handout to a few special interests now will not bear long-term fruit for all Americans. Instead, it will remove any incentive and urgency Congress should feel to enact real regulatory and tax reform.

Congress must stay focused on long-term tax reform that removes all special-interest carve outs and lowers tax rates for everyone. In order to do so, the FAA reauthorization bill cannot become a vehicle for shortsighted tax policy.