An elusive search for simplicity in taxes

For all complexities of California’s twisted system of taxation, one issue ought to be easily resolved – the basis on which airlines pay property taxes on their aircraft.

But because millions of dollars are at stake – roughly $80 million a year statewide – finding that compromise won’t be simple.

County assessors and the various airlines have a history of rancor and litigation over the method for assessing property taxes and the amounts airlines pay for their aircraft.

As it is, airlines pay property taxes based on a formula that includes the amount of time their aircraft spend in specific counties. That period is determined by picking a representative week in January and extrapolating the amount of time the planes are in that county for the other 51 weeks of the year.

The one-week standard dates to 1968, before computers made crunching data easy. Assemblyman Adrin Nazarian, D-Los Angeles, suggests an alternative that would be more accurate.

Noting the Federal Aviation Administration tracks each plane’s comings and goings, and could provide the data to counties, Nazarian suggests counties use a full year’s worth of information, rather than one week.

That concept, which is embodied in his Assembly Bill 2622, seems straightforward. Why not use data to obtain the most accurate information? County assessors support the notion.

But Southwest Airlines and the other commercial airlines raise many objections. One is that the calculation would be incredibly complex, involving 730,000 flights. Another is that standards vary among many counties that have major airports: Los Angeles, San Mateo, San Diego, Orange, Santa Clara, Alameda and Sacramento counties. Another is that extend

Airlines would much prefer a single standard, or a single entity, say, the state Board of Equalization, to handle their tax issues. One standard would make sense. Simplicity is important.

Airlines also want the right to be appeal assessors’ findings by presenting their cases anew to superior courts. That’s the topic of airline industry-backed legislation, Senate Bill 1329, by Sen. Bob Hertzberg, a San Fernando Valley Democrat.

Assessors oppose Hertzberg’s measure, believing that if airlines gain the right to seek trial de novo in superior courts, they regularly would sue, and bleed assessors’ budgets dry. They also worry other industries would seek the same authority, ultimately eviscerating the assessors’ power.

The broader issues aside, Nazarian’s bill faces a vote Wednesday in the Assembly Appropriations Committee. We urge the committee to let the bill proceed, if for no other reason than to keep the discussion alive.

There is little reason to base taxes on aircraft on one week in January – when relatively few people travel – rather than on 365 days. Using a full year, rather than one week, would help ensure accuracy. But because the issue involves millions of dollars in taxes, reason may be hard to come by.

This story was originally published May 17, 2016 at 5:30 PM with the headline "An elusive search for simplicity in taxes."