American Airlines - Last one standing

"Jay Honeck" wrote in message
news:reeWe.330700$x96.16375@attbi_s72...
All U.S. for profit businesses are subject to income, property and
various use and consumption taxes *in addition* to involuntary servitude
as tax and information collector for local, state and federal
government.

Yes, but I suspect the O.P. was making the point that businesses pay no
"real" tax, in that every tax they pay is passed along to consumers.

Which is why the Left's diversionary arguments about "making the
corporations pay more" always rings so hollow to my ears, BTW.
--

The issue is not a simple zero-sum pass-through as you suggest. There *is*
some balance to be struck.

The tax burden is shared by the workers (payroll income tax), the
shareholders (dividend income tax), and the consumers (sales taxes and/or
passed-through corporate tax).

In the cases where all three of these entities are the same person, you may
very well be correct: who cares whether the State gets its money from you
as dividend income, or as salary income, or as a sales tax on the end
product.

But on the other hand, the shareholder is not usually also the worker.
Where corporations have millions of shareholders, a great many shareholders
may even be outside the country. Hence taxing corporate profits before
distribution, probably guarantees a better chance of getting at the money
before it leaves the country, whether it is going to legitimate
shareholders, into dodgy tax havens, or being siphoned illegally by the
executive.

The left's argument is, of course, that the tax pendulum has swung too far
to the worker (payroll income tax), and away from the corporate shareholder
and executive. So taxing the corporations would "put more money in the
consumer's pocket" (workers being consumers). Of course the right suggests
this is nonsense, because in their mind, it is the shareholders that are the
consumers.

Neither is wrong, and the question becomes: What is the correct balance?
I am sure both sides can put up "today's" financial numbers and projections
to suggest that *they* are the ones paying too much and that any a reduction
of *their* tax will have huge benefits for the overall economy of the
nation.

Each may be right, or not... but the issue is not a simple zero-sum
pass-through as you suggest.

"Icebound" wrote in message
...

"Jay Honeck" wrote in message
news:reeWe.330700$x96.16375@attbi_s72...
....

The left's argument is, of course, that the tax pendulum has swung too far
to the worker (payroll income tax), and away from the corporate
shareholder and executive. So taxing the corporations would "put more
money in the consumer's pocket" (workers being consumers). Of course the
right suggests this is nonsense, because in their mind, it is the
shareholders that are the consumers.



"Taxing the corporations" is meant to mean: taxing the corporations more
(less shareholder income), and the workers less (more worker income).

But on the other hand, the shareholder is not usually also the worker.
Where corporations have millions of shareholders, a great many
shareholders may even be outside the country. Hence taxing corporate
profits before distribution, probably guarantees a better chance of
getting at the money before it leaves the country, whether it is going to
legitimate shareholders, into dodgy tax havens, or being siphoned
illegally by the executive.

That's nice, but irrelevant.

Whatever widget (or service) the shareholder's corporation is selling must
be priced proportionately higher in order to pay Mr. Shareholder his
dividend. If you tax Mr. Shareholder's dividend more, he's now making
less -- and the corporation will be compelled to increase profitability, so
that it can pay Mr. Shareholder his expected dividend.

Guess who pays for this increased profitability, in the form of a price
increase? You, me, and every other consumer.

This is obviously a grossly over-simplified example, but there really is NO
free lunch with taxes. Every single tax on business is a tax on the
consumer, in the long run -- and don't let any politician fool you into
thinking otherwise.

Example: Here in Iowa City, there is a 5% state sales tax, and a 7%
hotel/motel tax, added to the price of every, single hotel room. When we
advertise our hotel, we sure don't quote the "with tax" rate (hell, *we*
don't get any of that money), but when you check in -- golly! -- your $99.95
suite now costs $111.95!

Everyone thinks this is a 12% tax on the hotels -- but it ain't. It's just
another way for the politicians to stick it to Joe & Lois Sixpack -- and,
best of all (from the local politico's end) -- most of the people paying it
don't get to vote here! There are therefore NO repercussions against the
tax instigators at all.

And so it is with the airlines. Tax them, and you tax *us*.
--
Jay Honeck
Iowa City, IA
Pathfinder N56993
www.AlexisParkInn.com
"Your Aviation Destination"

"Jay Honeck" wrote in message
news:A2pWe.331656$x96.76629@attbi_s72...
But on the other hand, the shareholder is not usually also the worker.
Where corporations have millions of shareholders, a great many
shareholders may even be outside the country. Hence taxing corporate
profits before distribution, probably guarantees a better chance of
getting at the money before it leaves the country, whether it is going to
legitimate shareholders, into dodgy tax havens, or being siphoned
illegally by the executive.

That's nice, but irrelevant.

....snip...

Example: Here in Iowa City, there is a 5% state sales tax, and a 7%
hotel/motel tax, added to the price of every, single hotel room. When we
advertise our hotel, we sure don't quote the "with tax" rate (hell, *we*
don't get any of that money), but when you check in -- golly! -- your
$99.95 suite now costs $111.95!



That is exactly how it *is* "relevant". Your example has added 12USD of
taxes to the consumer. If that 12USD was not collected from the consumer,
the equivalent would have to be collected from the workers. You have
changed the distribution of the taxation load.

You may argue that is good place to shift the load, others may argue that is
bad.

Also, your example is strictly consumer taxation, not taxation on corporate
profit. Corporate taxes may or may not be passed down to the consumer. The
corporation's reduced after-tax profit may be offset instead by slower
expansion. Or, in a "competitive market", the corporation well may have to
reduce dividends to keep prices down and maintain market share. That's
where the big debate occurs....

And especially, corporate taxation addresses the issue of profits leaving
the country.

My whole point was not the right or wrong of how the balance should be
distributed between workers, consumers, shareholders, and corporate
expansion.

My point was that adding or reducing corporate taxes changes this balance
and is *not* a simple pass-through always to the consumer...as you suggested
in your original post. Instead, corporate taxation is a re-distribution of
the taxation load away from the worker.


And of course, as you suggest. it *isn't* simple. Governments have
interesting ways of "decreasing" (or "increasing") taxes for some sector,
whether labour, corporate, or consumer.... only to institute other
benefits/costs that may totally negate or even reverse that action.

So it may be interesting to see the actually amount of dollars which the
government gets from each of those 3 sectors, if reliable numbers could be
found, somewhere. One particular budget-analysis think tank, will have us
believe that the overall share of government revenue from corporations (in
2003) was lower than any year since 1930, except for 1983. And was 1/3
lower in 2003 than even 2000.

Again, we can argue that this is good, or this is bad, that is not the
point. But that share of government revenue has been shifted to somebody
else. *That* is the point. Corporate taxation re-distributes the tax
burden.

On 2005-09-15, nobody wrote:

Congress isn't the one constantly bailing out airlines. The banks are
the ones doing that...

Congress has been spending billions in taxpayer dollars on airline
bailouts for at least 15 years; both cash and loan guarentees. Perhaps
more congressmen ride on airlines than live behind levees

Bob Moore wrote:

"sfb" wrote in news:NJfWe.25196$8h6.14300@trnddc09:


Southwest, which starting flying in 1971, didn't fly outside Texas
until after deregulation in 1978 when they started service to New
Orleans in 1979.


That's right. Both Southwest and Air Florida (where I served as Director
of Operations) started as INTRASTATE air carriers, not INTERSTATE.
They were both regulated by state authority instead of the CAB/Dept of
Transportation.
We had quite a rush to certificate Air Florida prior to October 1972 at
which time the Florida Public Service Commission intended to implement
route and fare regulations similar to those in effect by the CAB for
Interstate Air Carriers. We grandfathered a lot of stuff on Sep 29, just
before the Oct 1 cutoff date. :-)
Many in the airline industry do not remember that Air Florida was started
with an ex-PanAm B-707-331, N705PA, and after one year, exchanged it for
three ex-Eastern L-188 Electras.

Bob Moore
Air Florida 1972-73
Chief Pilot, Director of Operations


Has everyone forgotten PSA?

Why does the government bother classifying airlines? Other than some
Commerce department financial kind of thing, there is no reason for
any classifications.

"Bob Moore" wrote in message
. 121...
"Gig 601XL Builder" wr.giacona@coxDOTnet wrote
None of what I posted in anyway said that SW was a major in 1979 and
the part you quoted above was in response to a statement that if an
airline didn't have international routes it isn't a major and that's
just silly.

Definitions have changed from time to time, but currently, the US
Government defines "Major", "National", "Large Regional", and
"Medium Regional" air carriers. The difference is solely based on
annual revenue except in the case of the "Medium Regional" where
there is a cutoff of 30 seat a/c as I recall. There are other
definitions such as Domestic/Flag and Scheduled/Supplemental.

Bob Moore

"Bob Moore" wrote in message
. 121...
"Gig 601XL Builder" wr.giacona@coxDOTnet wrote
None of what I posted in anyway said that SW was a major in 1979 and
the part you quoted above was in response to a statement that if an
airline didn't have international routes it isn't a major and that's
just silly.

Definitions have changed from time to time, but currently, the US
Government defines "Major", "National", "Large Regional", and
"Medium Regional" air carriers. The difference is solely based on
annual revenue except in the case of the "Medium Regional" where
there is a cutoff of 30 seat a/c as I recall. There are other
definitions such as Domestic/Flag and Scheduled/Supplemental.

Bob Moore

Which pretty much poo-poos the poster I was replying to's idea that you had
to have a counter in Japan to be US major.

sfb wrote:

The seller of the futures isn't extending credit. The buyer has a
contractual obligation to pay. Oil is a commodity that somebody will buy
so the exposure is limited to the difference between the future price
and the spot market price. If the airline goes broke and closes the
doors, it sells the futures contract for cash.

Since there is an exposure, this requires the seller to know that the
purchaser has the ability to buy the commodity. After all, if the
contract was for $30 per barrel and the price of oil dropped to $20,
then the seller would be getting $10 less per barrel then they would
have receive had a more stable entity had purchased the option.

Do you think they just sell options to anyone with the cash to cover the
cost of the option or do you think they look at the person's/company's
ability to actually covre the purchase of the commodity? IF it was only
an issue of cash to pay for the option cost, then why wasn't this done
by the other carriers?