AA keeping the U SGovt taxes

Discussion in 'American Airlines | AAdvantage' started by dc3, Jul 23, 2011.  |  Print Topic

  1. dc3
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    dc3 Silver Member

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    First US Air, now AA have decided to keep the 7.5% tax, TSA tax, etc. that is longer being collected for the US Govt since the FAA legislation/budget ran out last night. Rather than drop prices (e.g., $60 on a $300 ticket) the airlines are just raising their base fares and then adding no tax. The result is the same that you and I have to pay.

    This is only costing some $200 million a month or $30 million/day. Makes a lot of sense for Congress to so easily find a way to increase the deficit.
     
  2. dc3
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    dc3 Silver Member

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    Here is a write up on the matter from the NY Times. For a $16 million per year argument between the US House and US Senate, the US Govt loses $30 million/day.

    Makes sense to me, assuming you are part of the Alice in Wonderland story :)

    ==

    Efforts to avert a shutdown of the Federal Aviation Administration failed on Friday amid a disagreement over a $16.5 million cut in subsidies to 13 rural communities, meaning that at midnight nearly 4,000 people were to be temporarily out of work and federal airline ticket taxes suspended.
    Lawmakers were unable to resolve a partisan dispute over an extension of the agency’s operating authority, which was to expire at midnight Friday.
    The subsidy cut was included by Republicans in a House bill extending operating authority for the F.A.A., which has a $16 billion budget. Senate Democrats refused to accept the House bill with the cuts, and Republican senators refused to accept a Democratic bill without them. Lawmakers then adjourned for the weekend.
    Underlying the dispute on rural air service subsidies was a standoff between the Republican-controlled House and the Democratic-controlled Senate over a provision in long-term funding legislation that would make it more difficult for airline and railroad workers to unionize.
    Obama administration officials have said the shutdown will not affect air safety. Air traffic controllers will remain on the job. But airlines will lose the authority to collect about $200 million a week in ticket taxes that go into a trust fund for F.A.A. programs.
    F.A.A. employees whose jobs are paid for with trust fund money will be furloughed, including nearly 1,000 workers at the agency’s headquarters in Washington, 647 workers at the F.A.A.’s technology and research center in Atlantic City and 124 workers at the agency’s training center in Oklahoma City.
    Airline passengers could save money on their airfares, but the situation is complicated. Federal taxes on a $300 round-trip ticket are about $61, according to the Air Transport Association.
    Airlines, alerted earlier this week that F.A.A. authority could expire, have been making adjustments to their computer systems and Web sites so that at midnight, taxes were to be no longer added to airfares, the association said.
    One airline, US Airways, was already raising fares. Other airlines may try to reap a windfall profit from the tax holiday.
    Passengers who bought their tickets before the shutdown, but who travel during the shutdown, may be due a refund, said Sandra Salstrom, a Treasury Department spokeswoman. That is because it is not clear whether the government can keep taxes for travel that takes place during a period when the government does not have authority to collect taxes, she said.
     
  3. NYBanker
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    NYBanker Gold Member

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    $200 million a week is $10.4 billion per year. That's a lot of tax.

    Does anyone study the efficiency of this significant levy? Doubtful.

    We don't have many planes crashing, and extremely few mid-air collisions - showing that ATC, though using antiquated equipment, is getting the job done at an acceptable level.

    Could we get this same job done for $5 billion? We probably all know the answer.

    Let's give it a few weeks and see if we notice any impact from these 4,000 people not working. It doesn't sound like any are safety inspectors and a number of stories have said they're not controllers.

    * * * * *​

    OT: Regardless of which side of the aisle you're on, the biggest issue facing our national government is a culture of waste and a lack of accountability once funds are allocated. I know enough mid/senior level people in government who make very clear that it's not about doing the job well or efficiently - or (gasp!) returning unused budget money at the end of the year - a job in government for most people is about making your little empire as big as possible. The number of times I've heard, "We've got the budget, so we might as well..." from government-type friends is sickening. I remind them of this every time I head the "We've got the budget" line. Sadly, when I ask about this, any other way is a foreign concept to them.​

    If we trimmed all the waste, it regrettably wouldn't solve all our problems (based on the hole we've now dug), but it would get us a long way to where we need to be.​

    * * * * *​

    Further OT: A few months ago, a person that I know who works for the Agriculture Secretary mentioned that the Secretary was going to Afghanistan! That really piqued my interest. What in the world is the head of the USDA doing going to Afghanistan Secretary Vilsack (who knew he was the Ag Secy?) clearly had some pressing business - Kabul certainly isn't a boondoggle destination...but c'mon, what needs his attention there?​

    To get a sense of just how much money is poured into the USDA....let's start with the following. How many different "Agencies" and "Offices" do you think the Department of Agriculture has within it?​

    The USDA does have a pretty attractive blog...http://blogs.usda.gov/ at least. Not worth billions, but it's nice.​
     
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  4. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    Yeah. Coincidentally $10B is about the amount we spend each month in Afghanistan. Discuss :) (or not)
     
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  5. NYBanker
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    NYBanker Gold Member

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    Thats a lot of spending!
     
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  6. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    Indeed. And just posted to put the FAA number in perspective. We obviously all have different priorities and it's fairly pointless to discuss here where money is wasted (my guess: everywhere). But some numbers are orders of magnitude bigger than others, which we often lose perspective of (just look at the tiny amount of $13 million that they squabbled about and couldn't agree on, as dc3 pointed out).

    Ah... well, time to book some flights ;-)
     
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  7. jmrich1432
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    jmrich1432 Silver Member

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    It's too bad they let this go, but I will be booking several flights this afternoon that I otherwise would have put off.
     
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  8. Misplaced Texan
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    Misplaced Texan Gold Member

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    It doesn't work that way. This wasn't a tax going into the general fund. It was a trust fund tax that funded airport/ATC improvements and certain other FAA activities. All of those activities and spending have to stop as a result of not having passed the bill.

    The authority to collect the ~$30 million/day goes away but so does all of the spending that the tax was funding. So the net impact on the deficit is $0.
     
  9. NYBanker
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    NYBanker Gold Member

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    Doesn't this dough also cover ATC and certain things that aren't shut down, too?
     
  10. Scottrick
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    Scottrick Gold Member

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    So all we should do is shut down the government every third Friday and we'll be able to fix the deficit!

    Even if it is a revenue neutral issue, logic takes a vacation inside the Beltway. Like when federal and state laws required me to pay 20% more for a flight, get approval from five people, and spend two hours on and off the phone because I had to use a travel agent and couldn't just be reimbursed. The Constitution is only a few pages long even with all the amendments. I don't know why each piece of legislation has to be written in multiple volumes.
     
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  11. hulagrrl210
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    hulagrrl210 Gold Member

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    California tried that
     
  12. Scottrick
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    Scottrick Gold Member

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    I know. I had just left. I would really, really like to go back there someday, and I'm optimistic that they're starting to fix things.
     
  13. Timmer1001

    Timmer1001 Active Member

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    Looks like CO did the same. My base fare for a trip to VIE from SAT was $276 and now it is $308. Crooks
     
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  14. 7Continents
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    7Continents Silver Member

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    For those of us who reserve now but fly after this boondoggle is resolved, will the airlines ask us to pay the taxes in retrospect or are they taking the gamble, we keep the money or have it to pay the taxes with nothing lost in the long run.
     

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