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Why not a fee?
Author: TriSec    Date: 07/30/2011 11:10:10

Good Morning!

After a rainy night, the sun is breaking out, and it's looking like a beautiful day over on Spot Pond. For a modest fee, I'll even take you out on a kayak today.

Ah, but let's talk a little bit about fees today. Lost in all the debt ceiling debate is the fact that all non-essential FAA services have been shut down for over a week now. While planes aren't falling out of the sky, all construction, minor airport operations, and tax collection has stopped.

It's that last bit I find interesting. We all pay the extra costs when we fly, but do you think the airlines not having to collect taxes have passed the savings along to the consumer? Well, of course not! They're having a field day!

The noise generated by the debt ceiling debate has largely drowned out the news that the Federal Aviation Administration was crippled last week after Congress failed to reauthorize its funding. This has put 4,000 aviation workers on furlough, halted construction projects, and even stopped the FAA from collecting airline taxes.

But the shutdown isn't hurting the airline industry. Instead of passing the savings from the missing taxes on to consumers, the airlines have decided to increase ticket prices and keep the money that would have gone to taxes for themselves—a windfall of up to $30 million a day. Here's the Wall Street Journal:

The suspended levies include a 7.5% sales tax on domestic tickets, a $3.70-per-takeoff segment fee, a $16.30 (each way) international arrival and departure tax, and an $8.20 tax for flights linking the U.S. mainland to Alaska and Hawaii. Airlines must continue to collect security fees.

Airlines including US Airways Group Inc., AMR Corp.'s American Airlines, Southwest Airlines Co. and JetBlue Airways Corp. began Friday marking up their fares, although the fares didn't appear to be higher because the totals didn't change, says Rick Seaney, chief executive of tracker FareCompare.com.

Over the weekend, more carriers joined in, including Delta Air Lines Inc. and United Continental Holdings Inc., Mr. Seaney says. By and large, they raised fares 7.5% and added charges of $6 to $12 a ticket to account for the other fees.

So in addition to charging you to print a boarding pass, charging you for both checked and carry-on items, charging you for the convenience of using a credit card, and charging you for just booking a ticket to begin with, airlines have now figured out how to profit off the budget stalemate.

Ah, but isn't that the genius of the airline industry? They've figured out how to stay in business by imposing an increasingly bizarre series of fees and surcharges on everyone that sets foot on a plane. But that got me to pondering...instead of gnashing teeth and rending garments of the debt debate, why not just impose a series of fees on everyone and everything? I think it could work. But I wouldn't be imposing a blanket fee; it would be tiered and jiggered a dozen times over. But just about nothing would be exempt.

Here's how I envision it working on just a couple of things.

Of course things like alcohol and tobacco would have a fee on it.

Fancy electronics, computers, phones, and who knows what else (manufactured in China): 1% of purchase price

Cars under $50k - $100. Over 50k - 10%

Housing up to $500k - $1,000. Over 500k - 10%

Gas, clothing, other necessities - 50 cents per purchase. (anyone on SNAP would probably be exempt.)

There's hundreds of more items we could fee and surcharge. You'll note I try to weight it so those that can afford to buy more end up paying more. And that 10% figure is intentional; Mormons tithe 10% of their income to the church, so why don't we do the same for these United States?

Our friends to the North don't do this, but there is something called the "Goods and Service Tax", which ends up being a tax on a tax. It's still controversial and unpopular, but you can't argue with the results, can you?

In any case....something to ponder.

5 comments (Latest Comment: 07/31/2011 00:11:31 by TriSec)
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