Myth Busting: Isakson Tax Fairness Provision

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Opponents of fair competition in international aviation are actively lobbying against a provision in the Senate’s tax overhaul that would end tax giveaways to foreign airlines from nations that block U.S. airlines from fair competition. The language drafted by Senator Isakson ensures that the U.S. tax code does not offer preferential tax treatment to foreign airlines from nations that are violating U.S. trade laws and killing U.S. jobs. Americans for Fair Skies strongly supports the Isakson provision and is here to bust the myths being perpetuated about this provision by opponents of fair competition.

The International Air Transport Association (IATA) has, misguidedly, come out against the Isakson tax fairness provision. This is noteworthy, as the CEO of Qatar Airways, the largest subsidy recipient of the three-state owned airlines, and a clear violator of U.S. trade policy, is the Chairman of IATA. Qatar Airways would be insolvent if it was not for the billions it has recieved in government subsidies. Support for principles of fairness in international aviation is a key mission of IATA. This begs the question: is IATA really looking out for the best interests of international aviation fairness, or is the organization being led down a path of support for unfair skies to protect the narrow interests of its Chairman? This is deeply disturbing behavior by IATA and demands investigation.

Kevin Mitchell, the leader of the for-profit Business Travel Coalition, also (predictably) opposes the Isakson language, as does a coalition representing airlines that profit off the UAE and Qatari subsidies. We are not sure who is paying Kevin Mitchell for his opposition to this provision and his continued support for the UAE and Qatar over the United States. But his arguments, and those of the airlines that are aligned with foreign interests over U.S. interests, are another weak attempt to distort the facts of this issue.

The attempt to muddy the narrative by Mitchell and IATA does not change the reality that U.S. airlines and their employees are harmed by the UAE and Qatar’s predatory expansion. The subsidized growth of the state-owned and state-subsidized carriers, Emirates, Etihad and Qatar Airways, has distorted the international aviation marketplace, thereby depriving U.S. air carriers the ability to compete equally and fairly, as Open Skies agreements intended.

When the United Arab Emirates and State of Qatar made their respective decisions to begin violating international trade law by subsidizing their airlines, they upended decades of international precedent. Kevin Mitchell and others may claim that nothing stops a U.S. airline from flying to the Middle East, but those who live in the real world of business understand that government subsidies and capacity dumping undermine all principles of fair competition. As a result of the UAE and Qatari predatory expansion and distortion of the international aviation marketplace, U.S. air carriers have been deprived of their ability to compete on a level playing field.

Senator Isakson’s language recognizes the new reality of global aviation these foreign carriers have created with their violations of U.S. Open Skies policy and adjusts U.S. tax law accordingly. Isakson’s language removes a tax benefit from competitors that are in violation of their international agreements and have no regard for market demand and the financial norms of profit and loss, including Emirates, Etihad and Qatar Airways.

Senator Isakson’s provision also clearly articulates that it only impacts passenger operations. FedEx and other cargo operations are not impacted by this provision. Any suggestion by Kevin Mitchell and others otherwise is a myth, and an attempt to muddy the narrative with falsehoods.

Another myth is the speculation about “retaliatory action” by the UAE and Qatar if the U.S. restores tax fairness. This is also false. There are no U.S. passenger carriers serving the UAE or State of Qatar to retaliate against, because the U.S. passenger air carriers already cannot compete on the un-level playing field created by the two nations with their subsidized airlines. U.S. airlines and their employees can compete with any company in the world, and win, but in these instances, they are competing against the treasuries of nations.

Any suggestion by Mitchell or others that the UAE or State of Qatar would take action against other U.S. companies with operations in their nations is also a hypothetical falsehood and does not recognize the economic reality that the UAE and State of Qatar need the U.S. companies in their nations for their own self-interest given the benefits they provide.

It is clear that IATA, Mitchell, and others who oppose the tax fairness provision are grasping at straws with their opposition and are doing so not on the basis of facts, but in the interest of their foreign benefactors. Facts matter. And once again, Mr. Mitchell and other opponents of fair competition are looking to hide the truth.

Tax reform is currently being debated by the U.S. Senate. There is still time to make your voice heard. Call your Senators now and tell them you want them to stand up for American aviation and its workers by keeping Senator Isakson’s tax fairness provision in the final tax reform legislation.

americans4fairskies2015Myth Busting: Isakson Tax Fairness Provision

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