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Taxation of Aviation Prior to 1970, April 10, 2007 1 (April 10, 2007)

handle is hein.tera/crstax0025 and id is 1 raw text is: Order Code RS22641 April 10, 2007 CRS Repo for Congress Taxation of Aviation Prior to 1970 Robert S. Kirk Specialist in Transportation Resources, Science, and Industry Division Summary Prior to the 1970 creation of the airport and airway trust fund and the aviation taxes that supported it, there were no aviation specific taxes (taxes levied on aviation use or users solely for the support of aviation infrastructure) in the United States. Aviation users were, however, subject to manufacturers' excise taxes such as those on gasoline, oil lubricants, tires, and inner tubes. Excise taxes on the transportation of persons and property were imposed during the early 1940s as war revenue measures. Although efforts were made, beginning almost immediately after the end of World War II, to eliminate some of these taxes, most were retained in some form until passage of the Airport and Airway Development and Revenue Acts of 1970 (P.L. 91-258). This act imposed six taxes and extended one, all of which applied only to aviation, and dedicated all the revenues to the airport and airway trust fund. This report will not be updated. During the first 67 years of aviation in the United States, there were no aviation specific excise taxes (i.e., excise taxes exclusively levied on aviation use or users for the support of aviation infrastructure). Aviation users were not, however, exempt from manufacturers' excise taxes, such as those on gasoline, lubricating oil, tires, and inner tubes. The Revenue Act of 1932 (P.L.72-154), which imposed the first federal gas tax and reimposed taxes on oil lubricants, tires and inner tubes, specifically included aeronautical uses among other transportation uses. These were seen as taxes that would raise revenue in the depression environment of the 1930s. Prior to the 1932 Act, from 1917 to 1930, taxes had been imposed on tires and inner tubes, initially as a war measure, but the taxes were retained as a growing source of revenue during the 1920s. Table 1, sets forth taxes and tax rates that aviation users paid from 1932 to 1969. World War II needs ushered in a new set of changes on the taxation of transportation that included aeronautical use. A new transportation of persons tax on all common carrier transportation modes was imposed at 5% in 1941 for revenue purposes. It was increased to 10% in 1943 and again to 15% in 1944, at least in part, to discourage civilian travel during wartime. A 3% tax on charges for the transportation of property was also imposed Congressional Research Service -f-! The Library of Congress Prepared for Members and Commitees of Congress

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