Georgia conservatives threaten Delta tax break after airline cuts ties with NRA

Conservatives in Georgia’s Senate have a message for Delta Air Lines: Renew your relationship with the National Rifle Association or you will pay the price.

The state House had approved a tax break that could provide a $40 million benefit to the airline, but members of the Senate vowed to fight the deal after Delta dropped its discounted fares Saturday for members of the NRA.

Lt. Gov. Casey Cagle, a Republican, vowed Monday to kill any tax break for Delta, which is headquartered in Atlanta, unless the airline revived its discount program.

“Corporations cannot attack conservatives and expect us not to fight back,” Cagle said.

I will kill any tax legislation that benefits @Delta unless the company changes its position and fully reinstates its relationship with @NRA. Corporations cannot attack conservatives and expect us not to fight back.

State Sen. Rick Jaffares, a Republican, said that the break was worth $40 million but that he would lead the charge against it “to let Delta know their attack on the NRA and our 2nd Amendment is unacceptable.”

I stand with the NRA & support our 2nd Amendment rights. Delta Airlines is now seeking $40 MILLION TAX BREAK from the GA Legislature. I’m leading the charge to let Delta know their attack on the NRA and our 2nd Amendment is unacceptable.

Delta announced Saturday that it was joining at least 10 companies in ending its discount arrangement with the NRA, and asked the gun rights group to remove its logo from the group’s website. Other groups that cut ties include MetLife and Hertz.

The airline decided at its annual meeting to end the contract to reflect its neutral position in the national debate over gun control and notified the NRA on Saturday. The decision came after the shooting rampage Feb. 14 at a Florida high school that left 17 people dead.

“Out of respect for our customers and employees on both sides, Delta has taken this action to refrain from entering this debate and focus on its business,” the airline said in a statement. “Delta continues to support the 2nd Amendment.”

More about Delta Air Lines and the National Rifle Association:

The announcement came just after a once-in-a-generation overhaul of federal tax law. The direct benefit from the reduction in the corporate tax rate from 35% to 21% was hit-and-miss because several airlines don’t pay income taxes.

Delta took a one-time charge of $150 million in the fourth quarter because of new tax treatment for foreign earnings and the re-evaluation of deferred tax assets. But executives said during an earnings call last month that the company projects a future all-in book tax rate of 22% to 24%.

“We obviously are not going to see any cash savings in 2018 from tax reform since we weren’t anticipating paying any taxes, and we still don’t anticipate paying taxes in ’18,” said Paul Jacobson, Delta’s chief financial officer.

But as the company anticipates becoming a taxpayer in 2019 and 2020, it would use the benefits to more fully fund its employee pension fund, he said.

“We expect the benefit will probably be about $800 million a year at our current earnings level,” CEO Ed Bastian said. “So it’ll be a significant benefit for Delta and our owners.”

The less tangible benefit is whether corporations will boost travel spending spurred by the lower payroll deductions for consumers and greater corporate investment.

“We haven’t yet seen the evidence that there’s going to be stimulated travel demand given that it’s so early with the law just coming out over the last couple of weeks,” Bastian said.

Delta’s president, Glen Hauenstein, said the company is “very excited” about the potential for business demand.

“We haven’t seen that materialize yet, but we expect that to materialize in the first quarter,” he said.