Originally Posted by
Pinky the pilot
Although I believe cost per unit rose markedly here in Australia once depreciation laws were changed, which contributed to a huge drop in orders which didn't assist the manufacturers at all! Tailwheel and Gaunty are far more able to expound on those issues than I.
A similar thing happened in the US. The heyday of booming small aircraft sales was the 1960's and 1970's Cessna was selling more than 1000 172s a year for much of that period, and of course other models. Cessna was also selling 182s at about half the rate of 172s, which is still a lot of airplanes compared to today's numbers. Sometime in the late 1970's US tax laws were changed. Prior to that change, it was possible to deduct a large portion of the cost of owning an airplane (and other things) as a business expense. So if you were a small business owner, owning an airplane was pretty economical. As I understand it, the laws were changed so that you could only write off that portion of the expenses which could be demonstrated as being directly related to the use of the airplane in the business. By severely reducing the tax advantage, the cost of owning an airplane effectively rose considerably, and aircraft sales decreased dramatically.
My understanding is that this tax law change contributed a lot more to the decline of GA in the US than most people realize.