You’re Subsidizing Those Expensive Tickets Business Travelers Buy!

Christopher Elliott pointed to an article suggesting that you’re the one, as a taxpayer, covering the cost “for luxury transportation enjoyed by corporate millionaires..”

Let’s see if the claim holds water, and I can’t wait to hear what you think in the comments.

Premium class and last-minute travel is expensive — and, tax deductible for the rich traveling on business.

Most such travel is written off for hefty tax deductions. Business class and first class get written off together with such things as deluxe hotels, fancy restaurant meals and Super Bowl tickets. Not only are such perks all but exclusively enjoyed by the rich and big business, but the resulting lost revenue to the government means the rest of us, the 99 percent, make up the difference.

…When tickets are written off as business expenses all of that cost doesn’t fall directly on taxpayers. However, the taxes saved by the rich and big corporations don’t go into the nation’s coffers. In a world of continuing budget deficits, the money has to be made up in some way. The general taxpayer eventually gets the bill for these big business deductions for which most citizens do not qualify.

When the working class citizens end up helping to pay for luxury transportation enjoyed by corporate millionaires, something seems out of whack.

First, it’s a mistake to lump “last minute” and premium cabin travel. Last minute travel is anything but a luxury for the business traveler. Coordinating meeting and opportunities isn’t like coordinating Thanksgiving with the family, however arduous that may be. Adopting a rule that last minute travel was somehow not deductible would be a shot in the bow across entire portions of the economy.

That distinction aside, let’s look at premium cabin travel. And taxation.

“The rich” aren’t the ones primarily flying in premium cabins, the rich don’t have to travel for business as much as people have to travel to see them. Domestic first class is populated significantly by upgrades, which are given to heavy travelers that are mostly middle managers. The skies are filled with middle managers. And they’re filled with fairly well paid but very much middle class senior managers. And for them flying actually kind of sucks.

The depiction of the rich, for populist outrage purposes, isn’t really accurate. But it’s true that there are people who travel in premium cabins and those that don’t and those that don’t would probably like to (at the same price point). So there’s envy there.

But really, what’s to be envious of?

Business travelers travel a lot. And they have to go to meetings when they land. Arrivals lounges exist to freshen up after a flight, press a suit, go straight to a meeting. You try to get whatever sleep you can, and go straight to work. The alternative is more expensive for a company, of lost days or wasted trips from too-weary travelers.

And most travel, even in premium cabins is far from glamorous. You wouldn’t find employees, or at least the talented employees you want, if you made travel even more grueling. Fly long haul regularly, away from family and friends, away from your home. Long days, takes a toll on your body, no matter what I post about first class flights a bed onboard isn’t as good as my bed at home.

The IRS allows businesses to deduct those expenses that are ordinary and necessary for the conduct of business, so that taxes are based on income earned after these expenses. Taxing the gross would completely distort business accounting and lead to far less economic activity (since many businesses not yet profitable wouldn’t be able to invest at all, and indeed even money-losing enterprises would owe taxes for which they may have no cash).

The theory here, I think, is that there’s somehow a treat or perk that’s being given to employees that is going untaxed. Back before mid-1980s tax reform you regularly saw big perks at big businesses that were effectively compensation avoiding the IRS. The corporate dining room, subsidized and with extravagant meals, was a way for companies to engender both loyalty and provide pay (all meals were deductible to the employer but not taxable to the employee).

I remember being in junior high and reading one of Lee Iacocca’s books and his telling a story about the corporate dining room at Ford, why he could never get a hamburger as good anywhere else, adn the chef explained that they started with the finest steak and ground that up…

But the IRS doesn’t really let that happen anymore. And even when corporate cafeterias are legitimately culture-enhancing, the IRS has been saber rattling recently (against the likes of Google and Yahoo).

Government travel is far more arduous than it used to be with only the very longest trips allowed in premium cabins, but there are trips where it’s permissible. Corporate America has cut down on premium cabin travel quite a lot, the days of media companies based in New York (like ABC) allowing paid first class on flights over 4 hours are long gone.

And paid premium travel becomes the province of those whose opportunity cost is especially high, and where productivity on arrival is crucial to the organization.

Not in every case of course but you don’t make tax policy on the basis of outliers.

Changing the tax code wouldn’t provide real benefits, but it would hobble businesses, all in the name of spite.

Tax law changes and IRS rules have already cracked down on most of the perks of corporate America. What’s left are the things that do, for the most part, bear a real relation to the conduct of business. You can always second guess an individual purchase (are corporate offices too nice? are employees getting a perk out of a better chair at their desk than necessary? is that part of compensation, should be taxed, and not taxing it means we all have to pay more otherwise?).

That’s ultimately a problem of a complicated tax code. If these things trouble you consider waging a battle for tax simplification rather than populist envy. The renowned scholar and Democratic technocrat Larry Summers has long argued against the effects of taxes on capital, period. During Obama’s first term he had proposed lowering the corporate income tax rate in exchange for simplification.

You can’t really tax corporations per se, the incidence falls on shareholders, employees, and suppliers. So increasing that burden falls back on the very people the piece seems to suggest are getting hosed by way of their jobs and retirement accounts.

Eliminate the corporate income tax entirely and you solve whatever tax incentives may exist to overinvest in premium cabin travel, and leave only those parts that are important to the success of a firm…. which I suggest is most of the premium travel that exists now, anyway.

But throw your fists in the air if you wish as you travel into the coach cabin knowing that those premium cabin fares are making the airline’s sell of empty seats at the margin possible in the first place, and award seats possible too (because without those fares the flights themselves wouldn’t exist for the airlines to offer the excess inventory on points).


About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. The original article made my head hurt just trying to read it.

    All I can really say about the whole “luxury” bit… I travel overseas once year in a premium cabin for pleasure. I don’t sleep well on planes, no matter what. I’m looking at you CX F 😉 It takes me about 3-4 days before I can get over the jet lag and even sleep through the night uninterrupted.

    The idea that I would have to get off the plane, freshen up and go to a meeting, sh!t. And if I were to have to turn around and go straight back to the US within the next day or two, sh!t again.

    And the thought of doing that in economy? Oh hell no.

  2. I flew from SFO to DEL in economy for a 1 day meeting and then turned around and did the whole thing in reverse. This was 2011, and I think I’m still recovering.

    Silicon Valley doesn’t pay for business class. Many will at least get you in premium economy for long haul, but not my employer at the time.

  3. Can someone say a Chris Elliott Troll? You said I rarely provide you positive feedback- when’s the last time you complimented Chris?

  4. Get Real!
    I flew Transatlantic business on an upgrade. The adjacent passengers were two high end VP types. they were discussing whether there would be privatlely paid greeters at the gate. They were aghast at the idea of having to navigate an airport without help.
    Color me jealous but I don’t want to pay more tax while these nitwits get tax exempt greeters.
    If you really can’t navigate a European airport on your own you don’t deserve a job.

  5. To be added to the Quotable Gary Leff:

    “And most travel, even in premium cabins is far from glamorous.”

    and

    “Long days, takes a toll on your body, no matter what I post about first class flights a bed onboard isn’t as good as my bed at home.”

    I always assumed you had CX seats installed in your home!

  6. The problem doesn’t lie in the business traveler themselves, most of them are just going where the job takes them. And given the relatively diverse offerings for leisure travel, let’s face it, if you want to fly something other than the business class airlines, it’s not like you don’t have plenty of options especially in the US ( JetBlue, Southwest, Airtran, Spirit ) and Jet blue now has biz class right?

    So basically the entire statement by Mr Elliott is just met with a giant ? and a huge WTF.

    You’re going to have a lot of gnashing of teeth in the next couple of months with the IRS changes but it seems to me we’re stuck in yet another loop where there’s these people looking for devils in the details that just aren’t there. It always disturbs me when somebody really believes that they personally are paying for somebody else. How do you figure? Did you write the check? Did you hand over your credit card information?

    When I was younger I would listen, nowadays let’s face it , a majority of the people who stir up bull sh#$t like this are the same people who if you were at a poker table or a black jack table or a charity event or heck even at a totally casual “dinner” event at a Buffalo wild wings would short arm the living daylights out of you.

    And then sit there with this silly grin as they called you silly monikers behind your back.

    If you “paid” for somebody else’s travel, do us all a favor. Show us the receipt.

  7. @Gary: +1

    @Charles: I color you jealous. In some countries, it is a matter of courtesy for the host (or local company agent) to take care of his guests. Especially true if they do not speak the language or any number of other reasons (for example, your host organization is trying to impress you). Granted, Europe is far easier than Asia.

    I’ll bet you are the type who appreciates when the little things are done for you (like upgrades to air, hotel, and car) and are one of the first to complain when you don’t get what you thin you are entitled to.

    So, tell me, when you are a “high end VP type”, will you forego all of the perks that come with the job?

  8. Oh and wait a second, we “subsidized” an Entire 6 decades of a military industrial complex who raised an entire generation who blamed everybody else for their kids’ bad manners and now all of the sudden the biggest “issue” facing america today is who is flying on commercial airlines sitting in a seat 10 rows ahead of you and getting off the plane a grand total of 42 seconds before you do?

    SH addup already

  9. What is your argument here… that being a business traveler isn’t just a life of resplendent luxury? Well, okay, but isn’t that what compensation and salary are for? What does that have to do with deserving to write off premium travel as a business related expense? The burden of that payment is shifted, and ultimately the expense for that action is distributed in some part to those who are sitting in the cheap seats.

    In some ways, this tax policy says that the taxpayer is supposed to support businesses that force their workers to do difficult work by paying for lessening difficulty of this work… consider the possibility that taxpayers be asked as a matter of duty to lessen the cost of , for example, businesses providing better country club memberships to their constituents. In both cases others are being asked to cover costs associated with improving the quality of life and thus earning potential of senior managers and the like. How is this fair? In what way does increasing the compensation for high wage earners as a matter of tax policy improve general prosperity?

    I recognize this sounds very much like the argument du jour, and perhaps it is, but then you’ve done a real disservice if it can be boiled down in such a way by pretending the issue is such an obvious one.

  10. Darth, when you assume or bet, you might be wrong.
    I travel on my own dime.
    Yes, I appreciate when things are done for me, I am not the type that whines or complains. Life is too short.
    As an aside, the previous upgrade I referred to was a miles arranged upgrade paid for with personal miles.
    I am unlikely to be a high end VP, but I am blessed with a knack for languages and the skills needed to find my way out of an airport without help.
    I should point out that a friend of mine travels as a courier with valuable art objects, he is often escorted to and from the gate by security personell. I consider his situation to be very different.
    Daeth, the answer to your question is, I will forego greeters. I consider the idea an insult to my inteligence.
    The term high end VP types was very specific, these were not by any stretch CEO or CFO caliber.

  11. @charles: Did it ever occur to you that the folks paying for the premium seats are making the coach seats affordable? Why does BC cost 5-7 times coach? For what, a wider seat that reclines more (or flat), slightly better food, or a better selection of free booze?

    As far as European airports go, yes, one does not “need” greeters, but as I stated, many cultures consider it simply being a good host. Asia is a different matter when either you or a driver speaks a common language, and the Middle East – forget it.

    I travel to Europe and Asia a lot. I speak some Chinese, but not nearly enough to make myself understood by many drivers. I can navigate around Beijing and Shanghai reasonably well. But on first visits with a new client, either they send a driver or the local office sends an English speaker, or both.

    You still come off as entitled and jealous.

  12. Darth – I travel for work, don’t speak Chinese (I do speak give or take 7 languages with varying degree of fluency), don’t know my way around Beijing or Shanghai (or most other mega-cites for that matter), yet, I’ve never needed greeters to help me get through immigration or to my hotel from the airport. Nope, not even in Karachi or Joburg.

  13. What about private aircraft and corporate jets? Those are generally paid by the corporations and deducted as business expense… And they don’t even pay for the full costs of using up runway space at crowded airports like SFO or of air traffic control

  14. I will backtrack and limit my statements to apply only within Europe.
    I have reread my comment and my concern was primarily greeters. By greeters I do not mean drivers, I mean at gate greeters which is a service many of us did not know existed.
    I did not mean to enter into the longstanding issue of which class of service supports which. The fact that almost all Airlines have at least two classes in their configuration shows that both are necesary to make the numbers work.
    I am intrigued at the thought of being simultaneously entitled and jealous, one or the other would be more likely.

  15. @Carl

    I’ve worked with private jets for several years. I’m still waiting for someone to tell me what the “full costs” of “using up runway space” and “air traffic control” really are.

    Most private jets don’t utilize the 30 busiest airports in the US. That’s certainly true at LGA, EWR, JFK, ORD, LAX, MIA… the two notable exceptions on that list are IAD and LAS, which are the primary business jet airports for their respective cities.

    Like the operation of an airline, ATC and airport infrastructure is a high fixed cost, low marginal cost environment.

  16. Entitled in that when someone has a status and don’t get an upgrade the person complains.

    Jealous in that someone else is getting something that is not available.

    You see it all the time on these threads. People moan that they don’t get suite upgrades even though they have status through their manufactured spend and jealous that people who actually travel for a living and earn status the old-fashioned way sometimes get better treatment.

    For example, late last year when Delta rolled out its super secret invitation-only “360” service which included such things as rides in Porches to make tight connections, folks on many blogs were in a snit trying to figure out what it took to qualify and how would that affect their manufactured spend (MS) status (by losing out on upgrades). A classic case: Entitled because of DM through MS, jealous because there did not seem to be a way for them to get the same treatment.

  17. I’ve never really grasped the logic behind those who say business class flyers pay for the airplane, and coach is just lucky they are being subsidized and get to go along for the ride. If coach weren’t profitable, then airlines would fly with the back portion of the plane empty. What bean-counter would engage in the hassles of bringing along Mom & Dad & 3 crumbsnatchers and attendant FA staffing and insurance risks and so on, if they weren’t making money at it? That business class section is SHRINKING in newer configs should tell you where the real money is.

  18. @Vicente: Please reread what I posted. The incremental space, meals, amenities of BC does not justify the price differential. In that sense, having a BC cabin allows the airlines to reduce prices for casual flyers. Why else can an airline charge $8K for a discounted BC seat and $1500 for discounted coach?

    In a perfect world, airlines would make money on every seat. Those who do not (i.e., any carrier who has gone into bankruptcy) will ultimately be taken over by those that do, or they will go out of business altogether.

    Smaller BC sections will result in higher BC fares, and also less award availability – why give away a BC seat in favor of a paying customer? So, the $8K BC fare will go up to $9K. Coach seats will not change much.

  19. If by logic that “alll business class airlines” are destined to fail, it sure means that its the Y passengers subsidizing the front cabin.
    Just ask the qn, which one would exist without the other?

  20. @Darth Chocolate,

    I remain unconvinced of the logic of biz subsidizing coach. Businesses will charge what the market will bear. The fare buckets are a reflection of this. Handwaving that it “only makes sense” is what I see people do. Until an airline publishes the actual accounting on this we’ll both remain ignorant. The difference is you are certain of your position without data, while I am merely a skeptic.

  21. @Stargold: The reason they are destined to fail is that there are simply not enough customers to fill the seats at BC prices (like the business plan assumed). If it were not for rosy capacity projections, banks would never lend the money to get these ventures off the ground.

    It is all driven by capacity at some “average” ticket price. Discounted BC fares bring up the average a whole lot more than deeply discounted coach fares bring down the average.

  22. @Vicente:

    I know that math and logic are hard. Let’s look at a simple case: x BC seats sold at B dollars and y Coach seats sold at C dollars. In this universe, B > C (your universe may differ).

    Total revenue is x*B + y*C = R.

    Average ticket price is R/(x+y) = ATP. The airline decides that they want to maintain revenue no matter what the ratio of x to y.

    It is a necessary condition that C < ATP < B. Because the average must lie between the extremes.

    If the plane can only hold x+y passengers and the airline needs to maintain R, the ticket price must necessarily approach ATP which is larger than C.

    Therefore, BC seats subsidize Coach seats.

    This result is regardless of how many "buckets" you divide each class into.

    So, yes, I am convinced because I can do math.

  23. Now, I need to board a plane in BC back from Europe, subsidizing many coach passengers.

  24. My company recently permitted an “upgrade” to premium economy on flights longer than 8 hours. So on a 12 hr flight LHR/ICN, I am allowed to sit with an extra 6 inches of leg room. I am 6ft4, its hardly a pleasure travelling to Korea when I cannot move my legs for 12 hours. premium economy is not a luxury, its a necessity.

  25. Just to break apart what @Dark Chocolate said:

    The proof offered shows that business class tickets cost more than economy ones, which is not in dispute by anyone. What is more interesting to the airline is the revenue per square foot, or revenue per trip, or revenue per aircraft cycle, etc, etc. This comes down to the marginal cost associated with displacing other types of seats, cost of service, and the like. But to get to the matter of subsidy, what is really more useful here is what [i]fraction[/i] of that revenue R is driven by business versus economy, and this comes down to (previously used symbols) the ratio

    xB/yC.

    Looking at AA100 on a random date in August, an economy ticket is $1054. A business ticket is $7844 and a first is $10808 (we’d all buy RT tickets, but htis is just for the argument).

    Supposing for simplicity that a row of J displaces 2.5 rows of Y, and one row of F displaces two rows of J, then there are 2 Y seats and 4 J seats for every 30 Y seats. Revenue from that J seats is $31,400, revenue from the Y seats is $31,500, and revenue from the F seats is $21,600.

    Cost of service modifies everything, but it isn’t so transparently easy to say who shoulders a larger burden per square foot, likely by design.

    This, of course, misses the entire point. The question isn’t: which passengers are paying more for their seats than other passengers, because this is a matter of an airline’s revenue management. What you pay doesn’t force me to pay any more. Generally, higher Y fares lead to higher J fares, and higher J fares lead to higher Y fares, because as demand goes up, prices do too. This is why it is unwise to consider airfares as intra-plane subsidies: the airline charges what they want.

    On the other hand, there is a real and factual subsidy being discussed: which is whether business expenses should be able to be written off. While it isn’t immediately clear that paying for J somehow lets 10 Y pax ride, it is clear that: if those Y passengers are taxpayers, and if the J passenger writes off their ticket, those Y passengers are being required to foot the bill for the decreased tax revenue. If the Y passengers were also writing off their expense, this would be a wash, but since they are not and more or less can not, they are subsidizing an expensive fare.

  26. I have no problem with corporate types in front cabin on commercial airlines – I think it helps their productivity and does subsidize leisure travelers to a small extent. The private jets are entirely a different matter in my mind, with much abuse for personal travel, and deductions should be limited to the highest documented published fare, even it is first class.

    However, skyboxes at stadiums are my pet peeve. The taxpayers foot the bill once for the stadium (including the luxury boxes), then corporations lease the skyboxes as a perk and deduct the lease costs. The taxpayer actually ends up footing the bill twice!

  27. All. business travel, including meals and entertainment, is tax deductible but only a fixed percentage. You make it sound as if all last minute business trips in a premium cabin are not much more than a lark. Having spent years and years flying all over the world for business about 65 to 70% of the time, I can assure you that is not the case. If the tax deductions would disappear tomorrow the travel industry would be on the verge of collapse.

  28. Amazing that nobody points out what I consider the elephant in the room.
    Premium class passengers skip long security lines. It is rather surprising because all passengers pay the same for TSA safety inspections and security. The fee is not based on class of service.
    So, tell me again, why do Business class passengers cut my line?
    The Government sidesteps this issue by claiming that airlines or airport operators control the lines.
    I use the system the best I can. I sometimes upgrade or use miles to get this benefit.

  29. 99% of the people in this country do NOT pay income taxes…so his claim is impossible. A quick google search…CNBC reports only 43% of Americans pay income taxes.

  30. Even if business travelers were deducting premium airfare for business class, the airlines are reporting these fares as revenue and presumably, if they actually have net income, are paying tax on the revenue. One way or another the government is getting their money, NOT at the expense of taxpayers.

  31. Coloring in previous statement about TSA lines. Imagine going to the IRS office and being offered separate lines based on payment or how much tax you pay. Imagine the same for the State Motor vehicle Office.
    This is akin to our TSA lines giving priority to some over others.
    Nothing I am stating should be construed as being against other modes of controlling the lines, only against a system based on class of service.

  32. The more of this Elliott guy’s stuff I read, the less impressed I am.

    Tell you what, when I get to stop subsidizing Michelle Obama’s frequent multi-gazillion dollar vacations all over the world in 5-star hotels, we can talk.

  33. Chris Elliott is a shock-jock. I agree with Gary that business travel really stinks and is FAR from glamorous, like many leisure travelers might think it is. I had a job for a few years that had me on the road half of every month. I was single and I still hated it. Flying out on Sunday, back late Friday just to do laundry and pay bills on Saturday. Hardly time to see family/friends. And I had it good, others were on the road every single week. The times I used personal miles to upgrade were when I just couldn’t take it anymore, even passing on easily found voluntary bumps. The tax issue might be real but it’s very very small and any ire should be aimed at corporations rather than the traveler; he’s just trying to get his job done.

  34. @toomanybooks

    If you look carefully at the piece, the byline indicates that Elliot did not write this piece. In his defense, it was published on a site he partners with, and presumably have some sort of editorial control over the content. He did apologize for sloppy editing in the comments.

  35. Chris Elliott is a toolbag. Do the exact opposite of what he says, you’ll be right the majority of the time, if not all of the time.

  36. Gary, I have never seen a post from a knowledgeable blogger such as yourself that is more off base! The original comment was “Premium class and last-minute travel is expensive — and, tax deductible for the rich traveling on business.” True it is expensive and and true it is tax deductible. You can’t argue with that. The rest of the original comment is that this constitutes a subsidy for big businesses. In response to this simple statement you throw in irrelevant arguments about populism and envy and how business travel even in the premium cabin is incredibly arduous and even benefits the poor by making their travel less costly. Stick to the point which is the fact that every tax deduction (no matter how much you might like it or feel it is justified) is a subsidy. Period. End of story.

    True business travel is deducted from gross income as an “ordinary and necessary” business expense. So it is not like there is a special code provision allowing this deduction. Nevertheless, as you point out, many companies simply refuse to pay for premium-cabin travel under any circumstances. Their executives and employees are still able to transact business abroad. While business travel may be indispensable, premium-cabin travel is no prerequisite or requirement for conducting business. The premium cabin arrives at the same time as the coach cabin, and the time change for premium-cabin passengers is the same as for coach passengers. The only real difference is one has a bigger seat. The outliers are more and more those big businesses that shell out the big bucks for premium-cabin seats.

    Populist-envy arguments, a.k.a. class warfare, seem disingenuous to me. They are raised whenever there is any hint of an attempt to claw back some of the perks of the wealthy or big business but you will never hear them uttered when the tax code is rigged so that the income tax percentage CEO’s pay is often lower than the percentage their secretaries pay or when some of the most profitable companies are able to pay no tax whatsoever.

    Last, I must dispute your assertion that the premium cabin subsidizes coach travel. On the foreign carriers I’ve flown with three classes, first class is almost always totally empty and business class has many empty seats. US carriers always have full business-class sections thanks only to the non-revs. Coach passengers not only pay for their tickets but they provide revenue through food, alcohol, baggage fees, internet, movies, advertising exposure, duty-free sales, credit cards, seat selection, and other things the airlines are thinking of right now. Most of these items are not additional revenue in the premium cabin they are actually costs to the airline. In a domestic 737 you can get 36 passengers (roughly) into the same area as 16 in first class, and most of those are not paid first class but upgrades from coach. In an A330-200 you can get about 100 passengers (roughly) into the area provided for 34 business-class passengers. So premium seats should cost lot more than coach. Rather than each of us speculating, I would be very interested if there are any actual numbers comparing the benefit to the bottom line of coach versus premium-cabin travel.

  37. I agree with John, and would just add that letting a business deduct travel (1st class, luxury suites, etc.) as “necessary business expenses” with no cap whatsoever does amount to U.S. taxpayers subsidizing the wealthy. The wealthy in this case are not necessarily the butts in the seat/backs in the beds, but the CEO (who doesn’t fly commercially, anyway). Yes, shareholders are affected (though they aren’t everyday Joes either–look at who owns most of the stock in this country), but the CEOs and others at “the top” are making (imo) criminal amounts of money, and would not do so if they couldn’t deduct those insanely high travel expenses. There simply wouldn’t be enough money for the crazy salaries they get. Would some companies make the managers fly coach and stay at just the Sheraton? Maybe, but market demand would probably make them ramp up and pay those travelers’ expenses, and just knock 1M off their bonus. My 2 cents.

  38. Sheesh….

    Corporations do not pay taxes. I’m not saying they avoid paying taxes, I’m saying they never pay taxes. Taxes are simply priced into their cost structure.

    When their taxes go up, or the cost of fees and regulations increase, they raise the price of their product or service. Those taxes, fees, and regulations are paid for by their customers.

    In the same way that mandating a “living wage” will simply raise both prices, and the income taxes on those increased wages, making the whole thing a wash, raising taxes on the “fat cats” will simply make the ordinary person pay more for everything they buy.

    Airline seats, however, are a special version of what I said above. The extra revenue from Bus class, and sometimes First, allows the airline to sell economy seats for less. Should premium seats be taxed enough that corporations stop paying for them entirely, the price of advanced purchase economy tickets would skyrocket to make up the difference.

    It’s a fallacy that “soaking the rich” would allow everyone else to become Middle Class. All that would happen is lots of people who provide goods and services to the wealthy would be put out of work. With the result that the economy in general would go into a tailspin. As every single Socialist experiment throughout history has demonstrated.

  39. There’s a lot of generalization going on that makes it laughable. Someone booking a last minute premium flight is doing so out of necessity not because of tax advantages and the thought of earning miles. If cost of a premium class flight can be avoided in the first place, there’s a greater monetary savings than one would get from tax write off.

    If the business owner is on a cost plus contract, which is highly unlikely, unless their a govt contract, then it makes argument of booking last minute premium flights more plausible. Just making the generalization that folks traveling on business will book last minute premium class fares because they can write off their travel expense is just not true.

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