February 20, 2009
What’s at Issue
The U.S. House of Representatives and the U.S. Senate passed the final version of H.R. 1, the American Recovery and Reinvestment Act of 2009 that authorizes $787 billion in federal spending. President Barack Obama signed the bill into law on February 17, 2009.
Why It’s Important
The legislation is intended to provide long-term economic benefits by investing in transportation infrastructure, providing tax incentives and environmental protections. The President has estimated that the bill will create or save 3.5 million jobs. Included in the bill are provisions that benefit general aviation businesses.
Major Provisions
Aviation Infrastructure Funding:
— $1.1 billion is included for Airport Improvement Program (AIP) funding with a 100 percent federal contribution.
Aviation Security:
— $1 billion is included for the Transportation Security Administration (TSA) for the procurement and installation of checked baggage security detection systems and checkpoint explosives detection equipment.
Tax Provisions:
*NATA Members are encouraged to consult tax professionals or the IRS for specific questions related to these provisions.
— Bonus depreciation is included for new aircraft purchases. Effective for aircraft purchases placed in service on or after January 1, 2009, 50% bonus depreciation will be available in 2009.
— Internal Revenue Code Section 179 allows businesses to deduct up to $250,000 of a new or used business aircraft purchase or capitol improvements in the year of acquisition in lieu of recovering these costs over time through depreciation.
— Tax credits for working individuals are included for 2009 and 2010; either 6.2 percent of an individual’s earned income or $400 ($800 joint return).
— The law provides all taxpayers with a deduction for state and local sales and excise taxes paid on the purchase of new cars, light truck, recreational vehicles, and motorcycles through 2009.
— Alternative Minimum Tax (AMT) penalty relief is provided for airports that issue private activity bonds in 2009 and 2010.
Small Business Benefits:
— Eligible small businesses may increase the carry-back period for an applicable 2008 Net Operating Loss from two to six years. Corporations, partnerships, and sole proprietorships are all included.
NATA Position
NATA is concerned about the level of expenditure that the federal government has embarked on as such spending may not have the results intended. However, NATA believes that certain provisions are critical such as essential funding for aviation infrastructure to allow aviation projects that were put on hold due to lack of previous federal and state funding and that will now be able to go forward. In addition, because the legislation is deemed emergency funding it includes a full guarantee of funds by waiving the local match requirement, wherein airports are normally responsible for a certain percent of federal funds. NATA is hopeful that the tax incentives included in the bill will benefit general aviation businesses and that the money being spent by the federal government will create needed jobs in our county.
View the Obama administration’s expected employment numbers by state.
Status
During President Obama’s bill signing ceremony in Denver, Colorado, he discussed his administration’s plans for implementing this legislation with an unprecedented level of transparency and accountability. The Obama administration created www.Recovery.gov so every American can go online and see how their money is being spent.
Staff Contact:
Kristen Moore
Director, Legislative Affairs