Okay, today’s leasing headlines have really got me going (again). This time the cause is the latest misrepresentations by the press of legitimate, and quite legal, leasing transactions. I shouldn’t be surprised, since this is just another in an ongoing cavalcade of misunderstanding and finger pointing. I suppose we, as a society, need someone at whom to direct our anger on occasion. Equipment leasing gets more than its share of bum raps, though, especially when you consider that 80% of American companies finance at least some of their equipment with leasing.
Whenever the press reports on these deals they make a fuss about how the depreciation deductions help these investors avoid taxes. Simply not true! There is no avoidance of the taxes – they must be paid. Furthermore, the same amount of taxes are paid whether Singapore Airlines sells and leases back its airplane from Governor Schwarzenegger, or whether someone else loans the same amount of money to the airline. The only factor that changes is the timing of when those taxes are paid, which is later rather than sooner. Delaying the payment of taxes to the extent possible is just common sense. Even Wimpy, the Popeye cartoon character who would “…gladly pay you Tuesday for a hamburger today,” fully understands this concept (http://www.theneitherworld.com/popeye/wimpy/).
Although some aircraft transactions are esoteric, sale-leasebacks of airplanes are a fairly common and popular leasing product used throughout the world. They are legitimate financing vehicles, with nothing clandestine about them, and are regularly reported on by the aviation industry press, including magazines such as Airfinance Journal, as you can see at (http://www.airfinancejournal.com/default.asp?SM=ALL&DatePeriod=0&OB=R&Catalog=AFJ&Page=13&searchstr=sale-leasebacks&x=11&y=6).
Regarding Shawn Halladay's Article on Arnold Schwarzenegger's Aircraft Depreciation being used to DEFER vs AVOID paying Taxes.
I am very happy to find a man with Shawn's background and skillset being involved in a Prominent Blog that discusses Equipment Leasing & Finance in an INFORMED manner.
More often than not the folks that write about our industry lack technical knowledge and or just fail to meet the standards of excellence that Shawn brings to the table.
As Arnold Schwarzenegger would likely say, Shawn Halladay is "NO GIRLY MAN" when it comes to his knowledge of Equipment Leasing.
Too bad so many Girly Men do most the reporting on Equipment Leasing in the national business publications.
It has been a really tough year for our Industry when it comes to taking hits from the national media and uninformed political hacks.
Perhaps Shawn is just the type of ACTION HERO that we need to help bring us....baaaaack....to our former years of glory.
At the very least, Shawn's comments will be backed by Objective, Honest, & Factual intelligence, and years of study & research on Leasing issues & that can only be a good thing.
CONCLUSION: 2006 is going to be an excellent year for the Equipment Leasing Industry. I feel better already.
Posted by: Larry Greer GPS CAPITAL | January 6, 2006 3:29 PM | Permalink to Comment