It’s tax day, and what better opportunity to ask what taxes you’re paying when you travel, and where that money is going?
Of the big three — air, hotel, and car rental — air travel within the U.S. is the most tax-standardized (which isn’t saying much). Hotel occupancy taxes vary by municipality, and car rental taxes range wildly depending on how badly the state or local government wants to stick it to out-of-towners.
Air taxes, on the other hand, are more readily summarized. But when you learn about how some of those taxes are spent, you may not be happy.
Bob Porterfield of the Associated Press does the heavy lifting for us and tallies them up — 7.5% federal taxes, $3.40 segment taxes for each leg of the flight, $2.50 security fees per segment, and the airport-imposed passenger facility charges of up to $4.50 per landing.
But the real kicker is where some of those monies — in particular the 7.5% federal taxes on all scheduled air tickets — are going:
The federal government has taken billions of dollars from the taxes and fees paid by airline passengers every time they fly and awarded it to small airports used mainly by private pilots and globe-trotting corporate executives.
Fan-freakin’-tastic. Not only do these folks get to opt out of the mass-market security hassles, they get subsidized by the general public till to do it.
You may be asking if private aviation pays a different set of charges to cover its use of America’s overstretched aviation systems. Yes, and no. Mostly no.
Passenger taxes are collected in noncommercial aviation only in instances involving the fractional ownership of private jets, air charter operations and small commuter flights. Instead, it contributes to America’s air transit infrastructure in the form of a fuel tax that covers just a fraction of the services it uses.
For the most part, private jets don’t pay taxes, and certainly not nearly the percentage of taxes to which commercial travelers have gotten accustomed.
So are private jets paying enough? Nope.
A study released in February by the FAA said it cost $2.4 billion just to provide air traffic control for private and corporate planes in 2005. The industry contributed just $516 million in fuel taxes that year.
So how do you fix the disparity? Uniform, distance-based taxation? Fuel taxes? Landing fees? I don’t know, but I’d love to hear your ideas.
(image)
RSS (FeedBurner)
Read with Amazon Kindle
Subscribe by E-mail
Follow on Twitter
April 17th, 2007 at 10:12 am
Airline passengers pay a 7.5% excise tax on the ticket price. Private jets and aircraft flown for hire – private charters and fractionals – also pay the same 7.5% tax imposed on private charter and fractional jet passengers PLUS an approx. 4% total fuel tax and the same segment fees. A Gulfstream jet chartering at $6,000/hour is taxed $450 per hour of flight PLUS the fuel tax and segment fees, and thousands of private jet charters fly every day.
The FAA uses this money to support the system and a majority goes to support Air Traffic Control and major airports, which are avoided by private aircraft whenever possible in favor of smaller airports with easier access for the community.
Private aircraft avoid major airports which only reduces crowding and delays at the major airports for the airlines and passengers, and helps spread aviation and airport usage more evenly- locally, state and nation wide.
Thank you for the opportunity to comment.
See here for a summary of amounts taxed to private aircraft: http://web.nbaa.org/public/govt/testimony/20050504.php
See here for the IRS exact details on private aircraft and fuel taxes.
http://www.irs.gov/publications/p510/index.html
April 17th, 2007 at 2:14 pm
Thanks for your comment, Rick.
I note, however, that your numbers relate only to jets that are hired by the hour, and not those that are operated by their owners or their employees. If GM flies their executives from point A to point B in a GM-owned jet, it doesn’t pay the segment or 7.5% taxes, if I understand correctly.
So what percentage of private jets are chartered or fractionally-owned, vs. operated by their owners?
April 19th, 2007 at 9:37 pm
Unfortunately you fell for a poorly written and researched piece by Bob Porterfield which portrayed the $102 billion contribution of general aviation to the nation’s economy in a negative light. While commercial aviation (the airlines) contribute $0 to the cost of the nation’s air traffic control system (the passengers are paying the surcharge, not the airlines), general aviation contributes its share through a fuel surcharge on each gallon of fuel purchased. It is a system that has worked efficiently for the last 40+ years.
For a perspective from the other side of the FAA funding debate, please have a look at the following links:
http://www.aopa.org/faafundingdebate/
http://www.aopa.org/whatsnew/newsitems/2007/070416ap.html
http://www.gaservingamerica.org/Serving_All.htm