[anigbrowl]

I'm broadly in sympathy with the article's arguments, but:

Depreciation of corporate jets, meanwhile, is not some special loophole. All assets depreciate, which is to say they become less valuable over time as they become outdated and suffer wear and tear. Both financial accounting and the tax code recognize this. Depreciation is how the tax code handles investment expenses; if you disallow this, you would be essentially levying extra-heavy taxes on capital-intensive businesses.

There's a big difference between depreciation of your plant and machinery that form a core part of your business and that of luxury purchases for the C-suite. Airlines should certainly be able to depreciate their jets, so should companies like UPS and Fedex that run large air freight operations. So should any business for which flying is part of the business model.

But I'm not convinced that flying executives, investors, and suppliers around in a Lear Jet is essential in the same way. Rather, that seems like a really nice intangible bonus for the upper management to enjoy. And if firms want to spend money on that and shareholders don't object,* then OK - but either tax it as benefits-in-kind or disallow the depreciation.

* Not that the views of American shareholders are generally welcomed by management, but that's another issue.

[zaroth]

Disallowing depreciation would increase the cost by 40%, in other words basically outlawing the use of private jets. Doesn't sound like a good idea.

How do you single out providing a nicer airplane for business travel as a taxable benefit without treating the same any asset your employees use to make doing their job more pleasant? You create an impossible job of trying to decide what constitutes a "large enough" ROI for the business.

Buy your employees nice monitors? Must be a benefit! Ergonomic chairs? Tax it! Take a corporate bus to work? Charge em' per mile! A nap room that employees sometimes spend the night in? Serving filet in the cafe? Forget about that espresso machine in the break room. Oh, and that artwork on the wall's got to go. A basket ball hoop in the parking lot; that's a fitness stipend by another name!

For something to rise to the level of a taxable employee benefit it has to provide a lot more tangible direct personal value than this, and virtually zero business ROI.

All this is actually the perfect example for how nice it would be if we could find a better way to tax which avoided this mess.

[anigbrowl]

For something to rise to the level of a taxable employee benefit it has to provide a lot more tangible direct personal value than this, and virtually zero business ROI.

This is the point I was attempting to make in the first place.

[adventured]

Given the theoretically very high level of importance a CEO has within an organization, isn't it critical that their productivity be optimized?

Traditional airport travel now is incredibly inefficient in terms of time cost. Not to mention being able to fly when and where you want to upon command, is very valuable for extremely large businesses.

A CEO like Jeffrey Immelt might fly four or five days per week (per what I've read about his rather insane schedule in the past). Add just two hours per flight to his time cost, and that becomes wildly expensive.

[MisterBastahrd]

All airport travel is highly inefficient compared to staying in your office and being connected through the internet.

[anigbrowl]

This is one response, and I could add that for flying business class it's not the same sort of standing-in-line tedium that the general public is subjected to. But even then, Sam Walton (of Wal-Mart fame) was famous for flying coach, and I doubt anyone questioned his executive productivity.

But I'm not saying corporations shouldn't ever use private jets, just that their use often seems optional rather than a matter of business necessity, which has implications for how such expenses are taxed.