Schumer demands gov’t intervention to fix problem caused by … gov’t intervention

posted at 2:55 pm on April 15, 2010 by Ed Morrissey

Chuck Schumer says, “It so happens that the Treasury Department could stop” airlines from charging passengers for their carry-on luggage.  The latest major issue to hit Congress, apparently a higher priority than the BCS college football bowl system and chewing tobacco in major-league baseball, started when regional carrier Spirit Airlines announced their intention to charge up to $45 per passenger for carry-on bags.  But what Schumer doesn’t say is that Treasury started the problem with its previous government intervention.  Radio Vice Online has the video:

Did Spirit suddenly get a case of the meanies? Not exactly. A change in tax policy created by Treasury in January made fees for carry-on baggage tax free, since they determined — in their expertise on aviation — that carry-ons are not an integral service for airlines:

The senator’s legislation blocks a private letter ruling issued by the Treasury Department in January that allows airlines to receive preferential tax treatment for fees on services that are not deemed necessary for air transportation. The bill [from Schumer] declares carry-on bags are necessary for air travel, which makes the carry-on fee subject to taxation.

Sen. Ben Cardin (D-Ma.) [actually Maryland]  introduced legislation that bans the fee without fiddling with the tax code. Schumer supports his bill.

“We’re going to get this done one way or the other,” he said.

In other words, this is a case of corporate welfare meeting real-world consequences. The carry-on fee would allow airlines to soak passengers who have been packing more efficiently to avoid the baggage fees that airlines began to impose over the last couple of years to make ends meet. That revenue is subject to taxation, but the carry-on fee would have avoided it, which is why more airlines than Spirit would have eventually followed suit.

This is a good lesson in the consequences of a gamed, progressive tax code.  Obviously not even the Treasury understands how such changes affect real-world situations, and neither will Congress in attempting to make this patch.  It’s sheer folly to make one kind of baggage income taxable and another tax-free.  It creates more compliance costs, which also eventually get passed on to the consumer.

If airlines want to reduce the issues with excessive carry-on baggage, which leads to some delays in departures, then they should eliminate the checked baggage fees they imposed not long ago.  That was an obvious incentive for most of us to pack light and stick with carry-on luggage.  The federal government should have stayed out of it, though, and let passengers and airlines work out the problem in the marketplace from the beginning.

Update: The Hill incorrectly identified Maryland as ‘Ma.’ in their article; it should have been ‘Md.’


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

We are the Effups we’ve been waiting for.

fogw on April 15, 2010 at 2:57 PM

We are doomed!! Not really but some times you can’t help but wonder.

Cindy Munford on April 15, 2010 at 2:59 PM

Harumph harumph.

Bishop on April 15, 2010 at 3:00 PM

I really cannot stand that little creep’s constant s**t-eating grin.

MadisonConservative on April 15, 2010 at 3:01 PM

This requires the US Government to set procedures and fees for the airlines…how?????

Next thing they will be getting into is setting the price and flavor of Slurpies at 7-11s.

belad on April 15, 2010 at 3:03 PM

Who, a complicated, vague and capricious tax structure leads to lots of distortions and unintended consequences. Who knew?

If Spirit was smart, they would sell the tickets for $1, and charge $300 for a carry-on

Clark1 on April 15, 2010 at 3:04 PM

Does the federal government still allow me to mix lemonade and 7up at self-serve soda fountains?

WashJeff on April 15, 2010 at 3:05 PM

Here we see one of the most basic principles of “progressivism” in action;

Step 1. Create a problem with government regulation.

Step 2. When it becomes obvious that it is a problem, “solve” it with… yet more government regulation.

The concept of “leave well enough alone” does not exist in the progressive mindset, or indeed in their mental universe.

This mode of behavior probably explains why Schumer has had a perpetual schoolyard-bully smirk on his face for the last three decades.

clear ether

eon

eon on April 15, 2010 at 3:05 PM

If Spirit was smart, they would sell the tickets for $1, and charge $300 for a carry-on

Clark1 on April 15, 2010 at 3:04 PM

Fine print: Passenger must have one carry-on bag to board flight.

WashJeff on April 15, 2010 at 3:06 PM

Coming soon to a Congress near you…BagCare Reform. After all, we can’t have people that refuse to have luggage, because they feel they don’t need it, subsidizing those that have a need for luggage. And of course, pre-existing bags must be covered, as well as bags up to 26 years old.

mwdiver on April 15, 2010 at 3:06 PM

Government: If you think the problems we create are bad; wait till you see our solutions.

lorien1973 on April 15, 2010 at 3:08 PM

smug
smarmy
slimy
sleazy
sneaky
sinister

blatantblue on April 15, 2010 at 3:08 PM

Every Senator and Representative will be forced to write 100 times at the beginning of each congressional session the following:

I would rather be exposed to the inconveniences attending too much liberty than those attending too small a degree of it.

WashJeff on April 15, 2010 at 3:08 PM

Smart governance in action.

Scrappy on April 15, 2010 at 3:09 PM

If Spirit was smart, they would sell the tickets for $1, and charge $300 for a carry-on

Clark1 on April 15, 2010 at 3:04 PM

There’s only one problem with your scenerio. If the price of the ticket was $350, your typical Chuck-U voter would still feel ripped off, with the new pricing structure.

The thing is with stupid politicians like Chuck-U. All they’re doing is representing the stupid people who elect them.

MNHawk on April 15, 2010 at 3:10 PM

To be clear, the baggage fee is not tax-free income to the airline. They still have to pay tax on any income reported, including any income collected from the baggage fee. What is tax-free, is the fee itself, that is, it is free from the federal excise tax. This does not benefit the airline, it benefits the consumer!

http://is.gd/bulLi

In other words, Schumer wants Treasury to reverse a tax policy that saves consumers 7.5% on the price of a ticket (to the extent that baggage fee offsets the fare) to the benefit of the federal government.

That word he keeps using, “populist,” I don’t think it means what he thinks it means…

Planet Moron on April 15, 2010 at 3:11 PM

Jobs… Jobs… Jobs…

Oh, wait!

Seven Percent Solution on April 15, 2010 at 3:11 PM

Chris Matthews is still on the air??

PatriotRider on April 15, 2010 at 3:11 PM

I think Chris Matthews passed away a few years ago, but not sure what caused his demise.

volsense on April 15, 2010 at 3:14 PM

Schumer says: Look how important I am. I can pass a law that tells you when you can cut your toenails and just abount anything else. Now that’s power and I, I, I, I have it. Smug and self satisfied.

jeanie on April 15, 2010 at 3:16 PM

Schumer moans about nickel and diming while voting yes for trillion-dollar healthcare boondoggles. STFU and go away, schmuck.

JammieWearingFool on April 15, 2010 at 3:17 PM

Remember when Chuck Schumer tried to make a name for himself by going after cereal companies? He said he often ate a whole box at one sitting and was tired of getting gouged.

Golden Boy on April 15, 2010 at 3:17 PM

He seems to have a personal stake in this somehow…?

d1carter on April 15, 2010 at 3:18 PM

Schumer demands more gov’t pyromaniacs to fix problem caused by … gov’t pyromaniacs.

MB4 on April 15, 2010 at 3:22 PM

schmuck.

JammieWearingFool on April 15, 2010 at 3:17 PM

great word to add to my list!

blatantblue on April 15, 2010 at 3:22 PM

In addition to Ed’s point about why this is occurring, let me see if I have this Dem logic right:

It’s an outrage that Spirit Air (an airline one can choose to fly…or not) charges for carry-on bags, but it’s okay for ObamaCare to tax medical devices (costs which get passed on to ailing patients) – to name just one element of O-care over which we will have no other option.

Buy Danish on April 15, 2010 at 3:24 PM

Can we get some salt with that “intervention” Mr. Schumer, or will that be illegal too?

Speaking of baggage, how’s that tax hike coming along Chucky?

Rovin on April 15, 2010 at 3:24 PM

This is a real problem because, as we all know, Spirit Airlines has a monopoly on all transportation everywhere and all Americans will have no choice but to pay this fee which is only being put down 100% in the name of profit.

Wait, what’s that I say? Spirit is just a small airline I’ve never heard of before?

Red Cloud on April 15, 2010 at 3:26 PM

Seven Percent Solution on April 15, 2010 at 3:11 PM

lol

thanks for the daily chuckles :)

cmsinaz on April 15, 2010 at 3:27 PM

Having just cleaned my den and mopped the floor, I won’t risk vomiting all over the room by clicking the “Play” button. That said, why is there surprise? A Marxist’s answer to ANY problem is always “more government”.

oldleprechaun on April 15, 2010 at 3:30 PM

The federal government should have stayed out of it, though, and let passengers and airlines work out the problem in the marketplace from the beginning.

it’s starting to feel very deja vu around here…didn’t we talk about problems with gov’t intervention yesterday-yikes!

cmsinaz on April 15, 2010 at 3:30 PM

As long as they dont take our right to call the stewardess a bitch for not getting off our cell phones when the plane is taking off…

You got some real winners for politicians New Yorkers!

Jussi on April 15, 2010 at 3:32 PM

It’s an outrage that Spirit Air (an airline one can choose to fly…or not) charges for carry-on bags, but it’s okay for ObamaCare to tax medical devices (costs which get passed on to ailing patients) – to name just one element of O-care over which we will have no other option.

Buy Danish on April 15, 2010 at 3:24 PM

Excellent observation BD!

Hmmmmm….free market choices or government taxes and mandates? I’ll take misguided social experiments for $600 Alex.

Rovin on April 15, 2010 at 3:34 PM

Rovin on April 15, 2010 at 3:34 PM

And to borrow from the Left: Why does Obama hate sick people?

Buy Danish on April 15, 2010 at 3:40 PM

If we cut off the oxygen to Schumer’s brain, would anybody notice?

Americannodash on April 15, 2010 at 3:43 PM

Schumer demands gov’t intervention to fix problem caused by … gov’t intervention

That’s the same way most drug addictions progress too.

The white pills made me happy but sleepy; the blue pills make me awake but nervous; the red pills make me calm but sad….

And on and on and on.

logis on April 15, 2010 at 3:51 PM

If airlines want to reduce the issues with excessive carry-on baggage, which leads to some delays in departures, then they should eliminate the checked baggage fees they imposed not long ago.

Completely agree.

People who have a hard time lifting a baggie with an apple slice in it, seem to always be the ones who put a 75 pound bag in the storage bin and then proceed to take 20 minutes to get it in and get it out at the end of the flight.

If you can’t put it on your lap or put it underneath the seat, don’t bring it on the plane. It takes almost 30 minutes to board because of all of these dopes carrying everything they own + the neighbor’s kitchen sink, onto the plane.

NoDonkey on April 15, 2010 at 3:53 PM

Who, a complicated, vague and capricious tax structure leads to lots of distortions and unintended consequences. Who knew?

If Spirit was smart, they would sell the tickets for $1, and charge $300 for a carry-on

Clark1 on April 15, 2010 at 3:04 PM

Spirit’s $45 price for carry-on does come with a $40 reduction in ticket price, so less taxes are being paid. This is likely what Schumer’s beef is. :-)

Dasher on April 15, 2010 at 3:55 PM

Here’s an idea; if you don’t want to pay a fee for carry-on luggage, don’t fly Spirit Airlines. There, I fixed it and I didn’t even need to call a committee hearing.

Of course if Spirit goes under, due to their bad business decision, this idiot Schumer will push for a bailout.

Left Coast Right Mind on April 15, 2010 at 3:55 PM

And yet, airlines wonder why seats are going unfilled. Consumers have a limit of the amount of fees we are willing to absorb before we decide to drive. I do, however, hate the tendency of certain flyers to have 4 carryons and hog the cargo space above another seat to avoid checking luggage.

search4truth on April 15, 2010 at 3:57 PM

Left Coast Right Mind on April 15, 2010 at 3:55 PM

I don’t think this is a bad business decision.

Lots of people are like me – tired of taking 30 minutes to board and 15 minutes to get off the plane, due to all of the people trying to shoehorn 50 lb. bags into the overhead bin, wrenching it out at the end and not having near the strength to do either.

Eliminate the overhead bin altogether gets my vote.

NoDonkey on April 15, 2010 at 4:03 PM

What we need is a $55 per bag government tax to be used to insure that our “rights” as passengers are not trampled on by the airlines who want to impose their mean $45 per bag fee!

Wine_N_Dine on April 15, 2010 at 4:05 PM

Schumer demands gov’t intervention to fix problem caused by … gov’t intervention

Isn’t that classified as a “Dog bites man” story? As in, not exactly news?

tom on April 15, 2010 at 4:10 PM

Isn’t it a wonderful thing how federal laws have just fixed everything? Just a few more things left to fix but Skummer and his sort will surely take care of us.

PaCadle on April 15, 2010 at 4:20 PM

Chuck has a vested interest in the subject. How many people, in politics or otherwise, have more baggage to schlep around this a$$-clown.

P.S. Is it just me, or does Chuckie look as though he has a “joker” face beneath the layers of make up he wears?

MJBrutus on April 15, 2010 at 4:23 PM

I don’t think this is a bad business decision.

NoDonkey on April 15, 2010 at 4:03 PM

Right. And neither was New Coke.

But it will be if/when Spirit files for bankruptcy over it. Maybe airlines should, gee I don’t know, enforce/update their own rules regarding carry-on size and weight? Just a thought, but automatic fee-hiking in tough economic times is not generally a smart idea.

Of course if you fly for business, then you could possibly write off such a fee on your taxes, or get reimbursed by your company. But a family of 4 flying to Orlando paying up to $45 a head for carry-ons, plus God-knows-what for checked bags, then they might as well give their seats to their suitcases and either stay home completely, or ride in the baggage area.

Left Coast Right Mind on April 15, 2010 at 4:29 PM

People seem to be ready to forget the reason why baggage prices went up in the first place. What was the Airlines course of action when fuel prices were driving them out of business? Airlines might have felt a creative measure was needed to keep their heads above water. What happened was the plan to increase baggage fees to offset those rising costs of fuel. What options did they have other than grounding their fleets, shutting down temporarily or just going out of business all together? If those fuel prices have stablized, or the market has somewhat leveled out, then a possible retraction of those fees would make sense. Has a comparison been made of fuel cost now versus fuel cost then? Those answers need to come forth before government makes the problem worse all over again. If fuel prices are still climbing, how does a business procure the funds to stay in business it deems necessary in their industry other than raising fees for carry on bags, ticket prices? Is the cost of fuel still the culprit of the Airlines woes? If not, maybe they’re still just working through the process of recouping losses during that phase of higher fuel cost?

Americannodash on April 15, 2010 at 4:30 PM

Left Coast Right Mind on April 15, 2010 at 4:29 PM

I purchase flights on schedule and on the basis of no-layovers, personally.

Nickel and diming over baggage fees? Stay home and drive. You can pack all the crap you want.

By the time all of these idiots unload the overhead bins and I make my way to the baggage claim, it’s waiting for me anyway.

People will complain but it won’t affect their business.

NoDonkey on April 15, 2010 at 4:40 PM

NoDonkey on April 15, 2010 at 4:40 PM

So only people who are like you should be allowed to fly. Got ya. All I needed to know, thanks.

Left Coast Right Mind on April 15, 2010 at 4:44 PM

Left Coast Right Mind on April 15, 2010 at 4:44 PM

That’s quite a leap.

Just sayin’, if you can’t fly without bringing on a huge carryon, you should either drive or pay to ship it, if you don’t want to pay the baggage fees.

And I agree that the airlines should enforce the carryon rule, but figure the odds of that happening.

Their employees are not going to get into arguments with 25% of people boarding regarding their carryons. That’s what it would take and it’s not happening.

The basic rule is, if you can cram it into the overhead bin, go ahead.

Charging for it will make some of these knuckleheads think twice before carrying all of their crap onto the plane.

NoDonkey on April 15, 2010 at 4:49 PM

Next thing they will be getting into is setting the price and flavor of Slurpies at 7-11s.

belad on April 15, 2010 at 3:03 PM

And Sheriff Joe, with his natural rapport with South Asians, is just the guy to lead that effort!

ya2daup on April 15, 2010 at 5:09 PM

He seems to have a personal stake in this somehow…?

d1carter on April 15, 2010 at 3:18 PM

Well, he did call that flight attendant a b.i.t.c.h. over him being an ass about a cell phone. Maybe he’s getting back at the airlines. Or just being a snotty prig.

DrAllecon on April 15, 2010 at 5:29 PM

No matter how hard one tries, you just can’t fix stupid. (Matthews and Schumer)

elclynn on April 15, 2010 at 6:16 PM

If you think the tax situation for checked vs carry-on baggage is confusing, you should see what’s going on with other fees. Case in point, unaccompanied minor fees. (UNMR fees are charged to send children on a flight without an adult)

All airlines have different rules, but for the airline I work for it’s a mandatory flat $100 fee per direction for anyone aged 5-14. In their infinite wisdom, the bureaucrats have determined that since it’s a mandatory fee the tax must apply. Except it doesn’t apply on international flights. Unless the international flight is in the buffer zone, and then the tax does apply. But wait, there’s more! If the child is aged 15-17 then they are considered an adult, so we don’t require the UNMR fee, but parents can choose to pay it if they want to have some extra help for their child. Since it’s voluntary in this case, the tax doesn’t apply.

It actually gets more complex than that, and we’ve already spent more money than I care to think about trying to figure out how we’re going to write the code to determine when the tax applies and when it doesn’t. The cost of compliance is crazy, and all for what we estimate will be 2-3 million dollars a year or less the federal government will receive from this tax. When you add in the amount of time our agents will have to spend explaining this tax to customers, we’re going to waste potentially millions of dollars per year to collect what amounts to chump change for the government.

Rethers on April 15, 2010 at 6:37 PM

NoDonkey on April 15, 2010 at 4:49 PM

Got a better idea for you. Why don’t you fly first class? You can board first, exit first, get all sorts of perks that the other passengers don’t get and you won’t have to mingle with the schlubs in steerage.

Left Coast Right Mind on April 15, 2010 at 8:17 PM

Isn’t this just Schumer’s S.O.P.?

Cylor on April 15, 2010 at 11:34 PM

The next thing that will happen is Obama taking over all airlines and we’ll all fly free. Sorta like Nancy Pelosi and her private air force. Schumer is a modern day snake oil salesman, a pure bucket of sleeze.

Wills on April 16, 2010 at 8:34 AM

Yeah, if we spend about $1,000,000,000,000 the government could solve all of these pesky problems that the airlines have.

RustBelt on April 16, 2010 at 10:19 AM