By Vijay Yagnamoorthy Gnanaprasad
In Maryland, the rich enjoy a number of tax benefits. One of these is secretive tax deals between the state and local country clubs. Another is property tax exemptions for hobbies and playthings of the rich like private aircraft.
Maryland has a statewide property tax exemption for all vehicles. Approximately 88% of Americans own a car. Most Montgomery County workers commute in their car. Therefore, a reasonable argument can be made for exempting cars from property tax, especially considering other taxes that road users pay. However, there is no reasonable rationale to extend this tax exemption for private aircraft. It amounts to yet another way in which state tax law is written in favor of the wealthy and is endangering the planet, considering air travel’s high rate of carbon emissions
Maryland state legislature introduced an aircraft tax exemption in 1985 and it continues to this day. The most recent data on aircraft ownership shows that there are about 200,000 aircraft in the US. The vast majority of aircraft fall under the category of single-engine general aviation aircraft (GAA). In Maryland, this number is around 2500, almost 2000 of which are GAA. Such aircraft are generally used for personal purposes by a tiny minority. Like golf clubs and country clubs that receive significant tax breaks to the point of them virtually paying no taxes, the aircraft exemption also benefits the wealthy.
How much does the state lose because of aircraft tax exemption? If we consider only the 2000 GAA and a conservative estimate of $100,000 per aircraft, then that’s $200 million worth of assets. A mere one percent property tax on such assets would bring in $2 million a year to the state.
What can be done with around $2 million a year? One potential avenue is reducing homelessness. There are around 7200 people facing homelessness on any given day and more than 30,000 homeless using services in a year. The US Department of Housing and Urban Development (HUD) estimates there is a shortage of around 190,000 affordable housing units in Maryland – 92,446 for families earning less than 50% of the Area Media Income (AMI) of the area median income and 98,297 for families earning less than 30% of area median income. Further HUD states there are only 34 affordable housing units for every 100 households earning less than 30% of AMI. A small portion of the current state surplus of $500 million and additional revenue from an aircraft wealth tax could go a long way in fixing the issue of homelessness in the richest county in the state.
The aviation industry as a whole contributes a little over 2.3% of Maryland GDP. But the exact contribution by private aircraft is unknown. No matter the size of the private GAA industry, it is obvious that this niche hobby of a wealthy minority is enshrined with special tax rights in Maryland law. When it comes to the litany of social problems in Maryland crying out for better funding, the rich and their politicians in our state have their heads in the clouds.