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Washington Post Gives Dem Senator, DNC Chair 'Four Pinocchios' for False Tax Bill Critique

Posted By Cameron Cawthorne On In Politics | No Comments
DNC Chair Tom Perez / Getty

The Washington Post fact checker gave Democratic National Committee chairman Tom Perez and Sen. Jeff Merkley (D., Ore.) a "four Pinocchio" rating for falsely claiming on Twitter that the Republican tax bill would slash education and health benefits to give a tax break to private jet owners.

The Post defines four Pinocchio claims as "whoppers," which are blatantly false statements.

"#GOPTaxScam philosophy: Let's end tax benefits for colleges and students and give a tax break to private jet owners," Perez tweeted on Nov. 17.

"A private jet tax break paid for by slashing health care. You can’t make this stuff up," Merkley said a day earlier.

Perez and Merkley were not the only Democratic leaders to receive Pinocchios from the Post for making similarly inaccurate claims; Sen. Kamala Harris (D., Calif.) received three Pinocchios for falsely suggesting wealthy private jet owners would gain from a "private jet tax break" and Senate Minority Leader Chuck Schumer (D., N.Y.) received two Pinocchios for making a misleading  claim that 13 million people would be kicked off health insurance if the Obamacare individual mandate were to be repealed with the tax bill's passing.

Harris told her Twitter followers in a Nov. 17 tweet to retweet if they were not benefitting "from a private jet tax break." The tweet included a link to a Business Insider article with the headline, "The Republican tax bill has a provision that would end a headache for private jet owners."

The Insider article explains how the Senate version of the tax bill makes changes to various industries, and in particular, how the the Tax Cuts and Jobs Act "would correct a long-running dispute between owners and operators of private jets and the IRS." The Post believes many media outlets jumped the gun by calling the provision a tax break in their reporting.

The Post's fact checker, Nicole Lewis, noted the Insider used "tax change" instead of tax break, and other outlets like CNN, the Wall Street Journal, and the New York Times offered a more nuanced look on the provision. Lewis explained that rather than being a tax break, the provision provides much needed "regulatory clarity to the IRS."

If you’ve ever purchased a plane ticket, you’ve probably noticed that a portion of the ticket price pays for "taxes and fees." One of those taxes is the federal excise tax, which is generally triggered when a person or entity provides an aircraft with crew and sells tickets to passengers. Currently, the excise tax is set at 7.5 percent, and it mostly applies to commercial airlines.

Private jets, which are owned by individuals or groups of individuals, have operated under a gray area with respect to the tax. When a person flies on his or her own private jet, the excise tax doesn’t apply. But many owners of private jets lend their aircraft to management companies that use them to charter flights for others. Someone participating in a private jet program such as NetJets pays a fee — say, $550,000 — for a share of a jet, which entitles them to a certain number of hours of flying time.

[...]

In February, Sen. Sherrod Brown (D-Ohio) introduced a companion measure in the Senate [to clarify the tax], which Sen. Rob Portman (R-Ohio) co-sponsored, but the bill did not advance. The Ohio lawmakers took interest in the taxes because Netjets is based in Cleveland. During the debate over the GOP tax bill, Portman introduced an amendment with the same effect. Ultimately, Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) added the provision directly to the tax bill.

The Joint Committee on Taxation estimated the change was "estimated to reduce Federal fiscal year budget receipts by less than $500,000 for the period 2017-2026." In other words, less than $50,000 a year, which is literally a rounding error in the federal budget. In contrast, the GOP tax bill is estimated to reduce revenue by as much as $1.5 trillion over 10 years.

When the Senate voted to pass the GOP bill, with the provision included, it settled the debate over whether the companies should be charged an excise tax on management fees. In short, the provision provides regulatory clarity to the IRS.

The misleading claim, nonetheless, went viral.

Harris spokeswoman Lily Adams defended the senator's tweet in an emailed statement, citing multiple media outlets for how Haris reached a conclusion on the provision.

"After reading about this provision in The Washington Post, New York Times, CNN, and in a report from the Joint Committee on Taxation, we asked our followers whether they would benefit from this incredibly narrow protection to benefit a very limited set of companies. Nearly all of our followers, along with nearly all of Americans, will not benefit," she wrote. "That is a fact."

Lewis concluded the Democratic leaders are "misguided" for characterizing the excise tax clause as a tax break.

"The provision provides regulatory clarity on a tax that has never successfully been imposed on private jet management companies," Lewis wrote. "In short, the companies can’t receive a break on taxes that were never collected."

"Harris defends her tweet, arguing that they are simply describing the provision as it was reported in the media as a tax break," Lewis added. "But that was not the case with the article she retweeted — which also noted that the tax provision was valued at less than $50,000 a year. Moreover, several outlets offered a detailed take on the provision, making clear the clause aimed to settle a decades-long dispute between the IRS and private jet management companies."