NCPA - National Center for Policy Analysis

Taxes Stifle Global Competitiveness of U.S. Airlines

June 2, 2011

There are a few industries -- and their customers -- that pay more than their fair share of taxes: alcohol, tobacco, gambling and airlines.  Yes, airlines.  Most Americans have no idea that their air travel is taxed at the same excessive level as products and services that are taxed to discourage their use, says Nicholas E. Calio, president and chief executive officer of the Air Transport Association of America.

  • Putting aviation in the "sin tax" bracket is absurd, given airlines' beneficial -- indeed, essential -- role.
  • Aviation is central to America's global competitiveness and a key component of U.S. productivity.
  • The Federal Aviation Administration estimates that commercial aviation drives $1.2 trillion in economic activity and more than 5 percent of U.S. gross domestic product each year, and is responsible for 11 million jobs.
  • Every 100 airline jobs support about 388 jobs outside of the industry.
  • Yet the tax bite on a typical, $300 domestic round-trip ticket has nearly tripled to $61 today from $22 in 1972.

Taxes stifle the global competitiveness of U.S. airlines, which are so vital to our nation's growth.  By making air service more expensive, they lead to fewer business trips, less tourism and higher shipping costs.  The trend of over-taxation is counterproductive -- a punitive burden on airline customers and the overall economy, says Calio.

Source: Nicholas E. Calio, "The Air Travel 'Sin' Tax," Wall Street Journal, May 25, 2011.

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