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Senate abandons effort to add technical corrections and solar energy to FAA bill

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Tax Hot Topics: Federal Aviation Administration billThe Senate last week abandoned efforts to craft a broader tax package to be included with a reauthorization of the Federal Aviation Administration (FAA).

Many lawmakers had hoped to use the FAA bill as a vehicle for other tax priorities because few, if any, other tax bills are expected to move this term. Democrats pushed to include an extension of the Section 48 tax credit for several kinds of energy property, which they argue were inadvertently excluded as part of the December tax package. Tax writers had also hoped to include a package of technical corrections.

The deal fell apart late last week, and the Senate instead moved a “clean” tax title that would simply extend the following aviation and ticket taxes through Sept. 30, 2017:

  • 19.3-cents-per-gallon excise tax rate on noncommercial aviation gasoline
  • 21.8-cents-per-gallon excise tax rate on noncommercial aviation kerosene
  • 7.5% tax on the base ticket price
  • $4.00-per-person domestic segment tax for a single takeoff and landing (indexed for inflation)
  • $17.80-per-person international travel facilities tax for flights that begin or end in the United States ($8.90 for a flight that begins or ends in Alaska or Hawaii) (indexed for inflation)
  • 6.25% tax on the amount paid for transporting property by air

The House is proposing to replace the taxes with user fees and scrap the FAA in favor of a nonprofit corporation. Such drastic reform faces opposition from both Democrats and some Republicans and appears unlikely for now. The House and Senate will need to agree on an FAA extension by July 15, 2016, when the taxes are currently scheduled to expire.

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