The Airline Companies Savage Our Sense of Community
by David Morris
February 11, 1997 – published in St. Paul Pioneer Press
Too often stories about the breakdown of community point to kids cursing their teachers or basketball players kicking photographers. Those are apt examples to be sure. Yet to me the breakdown of community is much more vividly reflected in the recent doings not of a few uncivil brats but of one of the nation’s largest industries.
Here’s the background. For years airplane passengers have paid a 10 percent ticket tax to fund the runways and technologies that allow them to fly safely. The tax generated about $100 million a month. The airlines acted simply as tax collectors. The money was handed over to the Federal Aviation Administration.
Last January, as a result of internal bickering over the way the tax was imposed, Congress let the tax lapse. Did the airlines pass the tax savings back to the customers? Nope. They pocketed what in effect was someone else’s money. Profits soared.
Last August Congress finally got around to reimposing the ticket tax. The airports and the federal government fully expected the tax would be paid. But as the New York Times dryly notes the airline companies “read the tax code closely and found a…clause that said no matter how much was due, they could not be assessed penalties for paying late if they paid at least what they had collected two quarters previously.” In this case no tax had been imposed during the two previous quarters because the tax had lapsed. Therefore the smart fellows at the nation’s airlines figured out that they could not be penalized for not handing over the tax money to the government. So they kept it.
The Treasury never noticed the money wasnÕt coming in. “Mix-Up Over Airline Tax Has TreasuryÕs Face Red” reads the Times’ headline. Republicans seem eager to portray this as a case of government incompetence. Bill Archer, the Texas Republican who heads the powerful House Ways and Means Committee says that his committee is “anxious to have from the Administration a complete explanation of the events leading up to this error…”.
From my perspective this is far less a case of public incompetence than of private arrogance and greed and contempt. One measure of character is the extent to which a person does the right thing when no one is watching. By that measure the nation’s airlines receive a failing grade.
What the airlines did was legal. But to most of us what they did was cheating. The tax on passenger tickets was the way we had decided to pay for air safety. The tax money was not intended to bolster the profits of the airlines. By refusing to cut the ticket prices last spring after the tax lapsed and by refusing to pay the tax last fall when they discovered a legal loophole, the nation’s airlines acted with flagrant disregard for the rest of the community.
Rep. Archer insists that his Committee is seeking “recommendations for rectifying the funding shortfall in the trust fund.” Is there any question who should do the rectifying? The airlines. And since their passengers already paid the tax it seems only fair that the airlines’ shareholders and executives should pay it back.
Of course the government should have monitored incoming airline tax revenues more closely. But that wasn’t a simple matter because the aviation trust fund has a substantial balance and the same Treasury account that receives the ticket tax revenue also receives money from several other excise taxes.
On the other hand, can there be any question that the CEOs of the airlines were very much aware of the situation? Most undoubtedly gave their formal approval. It appears that every one of the major airlines participated.
In a recent essay in the Wilson Quarterly, Columbia University history professor Richard Bushman writes about the breakdown of community in America and suggests that we instill a “sensibility of concern and regard”. We all know that Dennis Rodman lacks this sensibility. Now you know that so do the heads of the nation’s airlines.
David Morris is vice-president of the Institute for Local Self-Reliance
