Congressional Budget Deal Will Double Airline Security Tax: Fair to Travelers?

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?

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, 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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  1. I dont hate the idea of raising the TSA fee.

    I do hate the idea of TSA not trying to reduce its budget or cost per screened passenger.
    I do hate the idea of it not going to offset their budget
    I do hate the idea of TSA wasting money for poor security with worse attitudes and even worse policies.
    I do have the idea of airlines having to hide this tax in the fare, making it seem like an increase.

  2. While I see the clever idea of calling it a “user fee”, I believe it is a tax on the whole population. Much of this fee revenue will be generated by business travelers. They will then in turn expense their travel costs, which will be built into their companies’ cost structures, priced into their products, and passed on to the public at large.

    One could also call a sales tax an optional “user fee” because someone could just elect to never buy anything!

  3. I agree calling it a user fee is wrong in this case. But I’m all for the increase.

    What too many Americans and all politicians can’t seem to realize is you can’t cut your way to freedom. You have to both cut and increase revenue. Revenue has to go up. I’m not saying don’t keep cutting. It takes both sides to win this game.

  4. I’m not too troubled. Yes, it is basically a tax. But we need to raise some revenue in addition to reforming entitlement programs. It is somewhat progressive (wealthier people tend to fly more). If some Congressmen feel more comfortable putting the tax in bucket A as opposed to bucket B, I don’t really care.

  5. I believe the new tax/fee is $5 per one-way trip, which is the same $5 for a one-way people currently pay when they have a connection, although it will go up to $7.50 per one-way by 2019.

  6. I don’t hate the idea of fees (taxes) being imposed – I disagree with it being buried in the text.

    That said – maybe we should also spend our time streamlining the existing operational budget to make it more effective (cost per person, time to assess) and to make it more efficient. Let’s also invest in the quality and caliber of the folks doing the security screenings.

    Streamline costs, invest in training, and get the right folks doing the job – and the budget might not be an issue (as much).

  7. I’d be willing to triple the fee if it meant we got sane security measures, including discarding nude-a-trons and letting us bring water on flights.

  8. Is it fair? Sure. Air travelers are a fairly wealthy segment of the population, and as you pointed out the fees don’t cover the TSA’s costs. But obviously it would be much better for everyone to just reduce TSA’s budget by the amount of the fee increase, since much of what the TSA does is not even pure waste — it does active harm by wasting everyone’s time and inducing people to drive more.

  9. Without reading the details it seems okay. I would rather pay the fee than have someone who isn’t flying pay it for me.

  10. Every penny that is wasted on Bad Security Theater is a penny that could go to a thousand other uses. We are so used to being nickel and dimed that we grow used to things like an extra $2.50 for one of the worst government agencies. So, yeah, it sucks all the way around.

  11. Putting it in the general fund (which is used to pay most of the TSA’s budget, amongst other things) is better than earmarking it specifically for the TSA, since it preserves the incentive for cuts to the TSA and less security theatre in the future.

  12. Now we just need to raise the Gas Tax or road tolls to reduce the subsidies that roads get. Then I’ll be happy to debate the merits of Amtrak subsidies.

  13. Air travel security is needed mostly because terrorists have chosen to kill air travelers and to use commercial aircraft as weapons. The cost of defending against this ongoing threat is logically an obligation of the government as a whole, not merely the segment of the public who uses air travel.

    If terrorists had chosen to target urban grade schools, would the government attempt to charge those parents for security, or would general tax revenues be used? The answer is obvious. Government is shirking its responsibility to pay for our defense out of general revenues for one reason only: Air travelers are perceived to be able to afford to pay more.

    It’s not a matter of right or wrong, fair or unfair. It’s a matter of grabbing the money first and making up the justification afterwards.

    I buy $50 tickets with my own money, well over 100 of them per year. Government taxes and fees are 20% of that price. Even a $2.50 per segment increase in fees is a 5% increase in my travel cost. I’m supposed to pay sky-high tax rates on tickets just because our country’s enemies have chosen my mode of travel as their mode of attack?

    Also, a 5% increase in a $50 ticket and a 0.5% increase in a $500 ticket doesn’t sound like a very progressive formula to me.

  14. @nsx: You’re still being subsidized by the public at large, even with this increased tax you are not paying the entire cost. In addition to TSA subsidies there is airport maintenance, construction, air traffic control, US Customs and Immigration, Police presence (local jurisdiction), and other functions. Though you are paying some taxes and fees toward this, they are still subsidized by the public at large due to the benefit that you mention. I don’t mind these functions being subsidized, I just mind when some (not you) turn around and attack subsidies for other modes of transportation while defending subsidies for others (roads, air) in the same breath simply because that’s what they use

    Since you mention schools, it depends on the state and locality, but I know that several around here are billed separately by the local municipality for fire and police protection. Protection for large events at schools and public universities are billed to those that attend them through the cost of tickets as well.

  15. I can’t decide whether I’d prefer it to be a progressive tax. :/

    If the idea is that people traveling by air *can afford it* then why not charge them by ability to pay? It seems like bad policy all around to increase a paid fare of $50 by 5% and others by less than .1%, when they could impact all travelers equally and potentially bring in more revenue.

    I think I’ve made up my mind then, unless someone has a better argument for it to be a regressive tax.

    Is there any reason they shouldn’t be honest about it, though? Call it what it is: a tax. I won’t stand for misrepresentation.

  16. @jamesb2147: I’d say the argument against being a progressive tax is that TSA security is a fixed cost regardless of the price of your airfare. You don’t use extra security because you’re flying Transcon first class vs. an ORD-STL regional flight.

  17. If the Gov’t lowered spending they wouldn’t have to keep increasing taxes and “fees” all the damn time.

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