Congressional Waste: The FAA and Airlines Taxes
Congressional infighting last month over union rules and subsidies for small airports caused a lapse in authorization for the Federal Aviation Administration as well as the airline ticket taxes that help fund it. The Senate finally passed a short-term extension on August 5—it took Senators Ben Cardin (D-MD) and James Webb (D-VA) just 26 seconds to do the job—but not before a two-week layoff of 4,000 FAA employees and 70,000 construction workers and an estimated $350 million in lost tax revenue. As if that waste wasn’t enough, the chairs and ranking members of the two congressional tax writing committees last week asked IRS Commissioner Doug Shulman to forgo collecting the ticket taxes retroactively and to delay resumption of the tax for three days “to restart processes to collect the taxes.” And, not surprisingly, a bill introduced yesterday would pay FAA workers for the two weeks they were laid off.
The extension tacitly allows retroactive collection of ticket taxes because the House passed it before the July 23 expiration and therefore didn’t contemplate the subsequent hiatus. The request to Shulman argued that the IRS shouldn’t waste its scarce resources collecting the lost revenue. It might be hard to go after air travelers who didn’t pay the tax but the IRS could target those airlines that took advantage of the tax interruption to raise their fares—often by the exact amount of the suspended tax. The airlines might need the revenue but so does the federal government. And there’s certainly no excuse for delaying reimposition of the tax—the airlines adjusted quickly to the suspension and need virtually no time to reinstate it.
The workers are another story. Congress has traditionally paid federal workers for periods when the government has shut down during parliamentary squabbles. Not doing so penalizes workers who would otherwise go payless through no fault of their own. Of course, that ignores the plight of the 70,000 construction workers who also lost pay.
Congress acted irresponsibly when it failed to extend the FAA authorization before its expiration. Given our dire fiscal situation, we can’t afford that kind of waste.
Note: This year’s interruption of ticket tax collections repeats much longer breaks more than a decade ago. The tax disappeared for nearly the first eight months of 1996 and again for about three months in 1997 before Congress reauthorized it each year. In neither case were taxes collected retroactively but they apparently resumed without delay after each reauthorization.