GringoLoco sends me to this Los Angeles Times article on the political fight over how the value of aircraft are assessed for California property tax purposes.
That’s right… airlines (including cargo operators) pay about $80 million per year in business property taxes. This is based on the value of the aircraft and the amount of time the planes are in the state, and the taxes are paid to 11 different counties.
County tax assessors value the aircraft, and estimate the time each aircraft spends in their county.
…one “lead county” [is designated] to appraise the fleets of each firm. The lead county crunches the numbers for its assigned carriers — Los Angeles County handles American Airlines and FedEx, for example — and distributes its findings to the other counties, which calculate the time each plane spends within their borders and send out the bills.
The airline industry wants one state agency to become responsible for determining the value of aircraft. Opponents argue that would make it easier for the industry to lobby for lower valuations. The State legislator sponsoring legislation to centralizing assessments swears this really isn’t a tax cut, because he’s a California Democrat after all.
Of course, the current system leads to complexity and also to some airlines assigned to some lead counties where they’re likely to be more heavily taxed.
Los Angeles doesn’t believe that the profitability of the airline industry can affect aircraft values, for instance, even though industry profitability affects the demand for aircraft and thus the price an airline might pay for or sell planes at on the open market.
The county’s assessment appeals board pointed out that aircrafts’ market value, on which the assessments are based, don’t change when airlines’ profits shrink, and rejected both claims. The independent appeals board said each claim would lead to “an absurd consequence.”
Somewhat arcane stuff, perhaps, but I pass this along because — though it makes perfect sense — it had never actually occurred to me that airlines were paying business property tax on aircraft (as opposed to, say, stationary equipment at an airport) in each jurisdiction in which they do business that has such a tax.