The final tax cut bill has not reached the President’s desk yet, but the U.S. Senate has wisely cut a ridiculous tax increase levied on foreign airlines from its version of the bill.
Per the Los Angeles Times:
Sen. Johnny Isakson (R-Ga.), whose state is home to Delta Air Lines, proposed the provision to require three carriers based in the Middle East — Etihad, Emirates and Qatar airlines — to pay corporate taxes for the revenue they generate in the U.S.
That sounds a little odd doesn’t it?
Under current international agreements, most foreign carriers pay no taxes on gross income they earn when they fly into the U.S. In exchange, U.S. carriers get the same treatment when they fly into most foreign airports. Airlines that fly abroad still pay landing fees and other charges for the right to land in foreign airports.
The provision introduced by Isakson would break that agreement by imposing a corporate tax rate on foreign carriers whose home country doesn’t have a tax treaty with the U.S. and isn’t served by an American carrier at least twice a week.
Qatar and the UAE do not have tax treaties with the USA. Saudi Arabia and Singapore don’t either, though Singapore would be spared thanks to the “two flights per week” exception. United operates daily service to Singapore from both Los Angeles and San Francisco. In total, the tax increase would have affected airlines from 11 countries/territories.
Thankfully, Isakson’s blatantly protectionist addition to the bill was removed by request from the Office of the Parliamentarian “because the amendment was determined to be extraneous to the overall bill.”
This provision was not part of the House bill, so as the massive tax cut legislation now goes to reconciliation, it is unlikely that the clause will be re-inserted to the final version.
A small victory for consumers…I chalk this up as good news. But keep an eye on the final bill. The eleventh hour is historically the prefect time to insert all sorts of “Easter eggs” into tax reform bills.