The Point of View Waltz

Back in 1971, Harry Nilsson wrote the concept album called “The Point,” which was later made into an endearing animated special that I recall seeing in elementary school. While much of the material isn’t particularly relevant to business topics (the album and the film are about equality, tolerance, and finding value in people who are different from you – a very enlightened viewpoint by 1971 standards) – I will still pull out the occasional reference, since many of them are timeless. One of the songs on the album was called “The Point of View Waltz” (often shortened to the P.O.V. Waltz), and I always wind up thinking about it when something comes up in the news that depends entirely on how you look at it – as does the call made yesterday for a change in the depreciation rules for private and company jets…

Much like a business, our government has only two ways of improving cash flow: bring in more revenue or eliminate spending. In the case of a national government, revenue is mostly generated through taxes – it’s occasionally possible to raise some money by selling off assets, but unless you can somehow obtain new assets for less than your sale price, this will have limited possibilities. Reducing spending generally means that someone who has been getting government funding won’t be – and in a republic, that someone will most often be whoever has the weakest representation in Congress. Traditionally, Democrats have attempted to fix cash-flow problems by raising taxes (but only on people outside of their core power base) while Republicans have attempted to cut services provided by the government (again, focusing on those services that don’t go to their political base), but both parties have tried to avoid mentioning that they get most of their support from the wealthy and powerful…

In the current case, the President is suggesting that private jets be moved from the five-year depreciation to the 7-year depreciation category – effectively, that the people who own private jet aircraft should have to pay more taxes on them. Doing so would generate an additional $3 billion dollars over the next ten years – which sounds very impressive, especially considering that anyone rich enough to use a private jet in the first place can probably afford the increase in costs. However, when you consider that the President is trying to eliminate $4 trillion worth of Federal deficit, this comes to less than one-tenth of one percent of the total. It’s a good start – $3 billion is enough to do a lot of worth-while things, even in 2011 dollars – but for the Democrats to present this as a major step forward (or a major blow to the greedy rich) is just as disingenuous as the Republicans presenting this as a major hardship being visited upon people who already carry the bulk of the tax burden in this country…

The truth is that none of our national problems are going to be solved by political grandstanding, let alone with stupid accounting tricks, which is all this particular measure actually is. Even if you lined up a dozen more new taxes just as big as this one, you’d only cover about 1% of the deficit, and you’ve already got people from the private jet industry complaining about being “singled out” by the Federal government and how unfair this is. Meanwhile, our national debt is growing and our economy is tanking while our political leaders stand around and posture with tax raises and tax cuts that they know will serve no purpose beyond appealing to their own party’s power base. How you regard the situation, as with how you regard this particular tax initiative, depends mostly on your point of view – but from where I’m sitting, none of this is particularly reassuring…