Subsidies make some too mobile, taxes make buyers pay too much
US helps CEOs fly free, Russia hurts people buying cars
CEOs think their time is more valuable than yours, so they make you pay for their plane rides. And politicians think citizens should be forced to buy inferior cars from inefficient and corrupt companies. While thatís bad enough, the tariffs that governments levy will hinder trade just when the world needs trade and cooperation to reverse the recession. We trim, blend, and append two 2008 articles on Dec 21 that highlight how government taxes and subsidies distort how the rich and the hoi-polloi get around, from the AP on subsidized jet use on the BBC on taxed purchasing of passenger cars.
by Stevenson Jacobs and by the BBC
US Govít subsidizes corps. flying private jets
Six financial firms that received billions in bailout dollars still own and operate fleets of jets to carry executives to company events and sometimes personal trips. A cross-country trip in a mid-sized jet costs about $20,000 for fuel. Maintenance, storage and pilot fees put the cost far higher.
Insurance giant American International Group Inc., which has received about $150 billion in bailout money, has one of the largest fleets among bailout recipients, with seven planes. Five other financial companies that got a combined $120 billion in government cash injections -- Citigroup Inc., Wells Fargo & Co., Bank of America Corp., JPMorgan Chase & Co. and Morgan Stanley -- all own aircraft for executive travel. The jets serve as airborne offices, time-savers for executives for whom time is money -- given overblown CEO paychecks, lots of money.
So why were Wall Street executives spared from the corporate-jet backlash that was let loose upon Detroit carmaker executives? One reason is that they didn't have to go before Congress to request bailout money, so no one asked how they traveled to Washington.
SEC rules require publicly held companies to disclose executives' personal use of corporate aircraft. But there's "a lot of gray area" in how they do it. If you use the plane for a personal trip but make one business call, should you report it?
Some firms are cutting back, either by selling the planes or leasing them. AIG sold two jets earlier this year and is selling or canceling orders for four others. The inventory of used private jets for sale was up 52 percent as of September.
A few big U.S. companies have shunned jet ownership. Chipmaker Intel Corp., for example, requires executives and employees to fly commercial. Intel occasionally charters jets for executives on overseas trips for security reasons, though.
Some corporate chieftains make no excuses for flying the private skies. After years of railing against such costs, billionaire investor and Berkshire Hathaway Inc. CEO Warren Buffet broke down in 1989 and bought a Gulfstream IV-SP using $9.7 million in company funds. He named the aircraft "The Indefensible."
JJS: Whatís also indefensible is beating people for demonstrating against being forced to pay more for quality cars -- and levying the taxes on auto imports in the first place. Tariffs tend to backfire. Imported cars generally pollute less and the competition forces domestic industries to improve or move over into fields where they can excel.
Ruski govít levies higher tax on cars for consumers
In the eastern city of Vladivostok, about 500 people gathered in the city's central square to demonstrate against a new tax on imported cars. Russian riot police broke up the rally. Witnesses said police officers kicked protesters, damaged journalists' equipment, and made dozens of arrests.
Vladivostok, one of several cities holding protests, depends heavily on car imports from Japan and critics say the tax could push prices up by 50%.
The tax is intended to help prop up Russia's domestic car industry and prevent people buying cheaper, imported products.
Protests against it began a week ago and have also been held in at least nine other cities in far eastern Russia, local Russian media report.
Most of the demonstrations were dispersed by police, said the independent Russian radio station Ekho Moskvy.
More are planned for Moscow and other cities.
Witnesses said the several hundred people who had gathered in central Vladivostok were singing and dancing and that the rally was peaceful with no sign of political placards.
Some of the protesters were reported to have been shouting slogans against the Prime Minister, Vladimir Putin.
The protesters were ordered to disperse by police who told them the rally was unauthorized, before members of the Omon riot police began to arrest people, hauling them into waiting vans, said witnesses.
Several journalists were detained and there were reports that others were injured or had their cameras and recording equipment damaged by the police.
A 62-year-old woman who saw the incident said the police were also arresting passers-by. "They started taking people away without any sort of comment," she said.
The BBC's Richard Galpin in Moscow says protests against the new tax have been fuelled by the severe impact of the global economic crisis on Russia.
The country's industrial output dropped 10.8% during November and its reliance on raw material exports means it has been been hit by falling oil prices and a reduction in demand.
But such open displays of anger are an unusual sight in Russia, where the government keeps tight control of the public and the media, says the BBC correspondent.
Jeffery J. Smith runs the Forum on Geonomics.
Detroit is Out of Gas -- should taxpayers kick in?
BROOKS -- CEOs more dangerous than socialists
While a New York political leader urges a tax on traffic
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