Berkshire Hathaway’s NetJets is threatening to move its business out of Ohio if proposed tax changes included in Ohio’s state budget become law.
The repeal proposal included in the House budget package removes the cap on sales taxes of fractionally owned aircraft. The cap was enacted in 2003 and is currently set at $800.
Also to be repealed would be a tax exemption for sales of property and services to maintain and repair fractionally owned aircraft.
“NetJets would either have to pass this tax obligation through to its customers which would adversely affect NetJets competitiveness by increasing the price of its products or alternatively, it would have to incur the tax impact itself thereby negatively affecting its profitability,” Bradley Ferrell, Executive Vice President of Net, says. “Neither of these options would be palatable to NetJets long term. Instead, NetJets would be forced to consider other states with more favorable sales tax environments. And there are plenty.”
The tax breaks also benefits NetJets’s Cleveland-based competitor, Flexjets.
© 2019 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.