The budget deal announced yesterday by Patty Murray and Paul Ryan, Democratic Senator and Republican Congressman, would (among other things!) double the airline security fee. Under the agreement, which still has to make it through Congress, passengers would pay $5 per segment instead of $2.50 for aviation security.
This raises revenue, and by framing it as a user fee lets Paul Ryan claim that he’s agreeing to a budget deal without tax increases.
But is that right? Money is fungible, and it’s more money for the federal government than before. Perhaps air travelers should pay the costs )the current fee covers only about 40% of the TSA budget), although and of course aviation is already one of the most heavily taxed industries but then it’s also one of the industries with the heaviest government involvement (perceptions of deregulation notwithstanding, that really just means the government no longer has to sign off on prices, routes, and schedules). The TSA budget doesn’t just go to airport security. Perhaps it doesn’t solely benefit travelers in any case.
All of those are interesting questions. At least as interesting is the accounting gimmick contained in the budget deal.
Transportation policy researcher Bob Poole writes:
[T]he existing $2.50/segment fee is categorized as a “discretionary offsetting collection.” That means the $2 billion a year it generates is subtracted from TSA’s $5.2 billion aviation security budget, for a net budgetary cost of $3.2 billion. “But in order to make sure that any fee increase goes to deficit reduction, the Ryan budget assumed that the increased portion of the fee would be classified as mandatory receipts or revenues, deposited in the general fund, and could not be used to offset any TSA spending.”
Bingo—the increase is a tax, not a user fee. The proceeds of the increase go into the general fund, to reduce the deficit. The same is true of the Administration proposal adopted by the Senate majority. I know the explanation is arcane, but there it is in black and white. Both House Republicans and Senate Democrats actually are trying to dress up a tax increase in user-fee clothing. They are singling out this one industry for a special tax to reduce the deficit.
As a purely budgetary matter, it’s a tax not a user fee. Do you feel the increase is fair?
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