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Regulation and taxes reduced but prices go up - 7/25/2011 4:26:38 PM

DomKen

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More proof of the utter ridiculousness of the libertarian belief system.
http://www.reuters.com/article/2011/07/25/us-airlines-fares-idUSTRE76O4I920110725

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RE: Regulation and taxes reduced but prices go up - 7/25/2011 4:56:32 PM

rulemylife

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Am I reading something wrong or does the author of this article contradict herself?

Reuters) - Many U.S. airlines have raised fares in recent days to take advantage of a lapse in U.S. ticket tax collection after Congress failed last week to fully fund the Federal Aviation Administration budget, but passengers are not likely to notice any price difference.

Then a little later she tells us:

JetBlue Airways Corp and Southwest Airlines Co began raising ticket prices by at least 7.5 percent on Friday, according to FareCompare.com. Other airlines, such as Delta Air Lines Inc and United Continental Holdings Inc, boosted prices on Saturday.

So I'm confused.

How do ticket prices get raised without passengers not likely to notice any price difference?

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RE: Regulation and taxes reduced but prices go up - 7/25/2011 5:14:07 PM

WyldHrt

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quote:

Am I reading something wrong

Yes. They raised the price the exact amount of the tax they used to charge but are no longer collecting. Now that 7.5% goes into the companies' pockets instead of to the gov't as taxes.

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RE: Regulation and taxes reduced but prices go up - 7/25/2011 5:19:10 PM

hardcybermaster

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note to america
you are skint
you have to pay more taxes
simple enough for you?

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RE: Regulation and taxes reduced but prices go up - 7/25/2011 6:36:25 PM

WyldHrt

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Err... was that supposed to be in reply to me?

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RE: Regulation and taxes reduced but prices go up - 7/25/2011 7:45:33 PM

slvemike4u

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So that's how people didn't notice Rule.....tricky shit heh?

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RE: Regulation and taxes reduced but prices go up - 7/25/2011 7:54:13 PM

TheHeretic

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Reminds me of when the cigarette companies raised the price 75 cents a pack, 3 weeks before Obama jacked up the taxes that much as one of his first moves in office. (Funny thing. I didn't know that all smokers earned over $250,000 a year...)

These things take a little time, Ken. Next time the airlines get into price wars, instead of price fixing, that money will come out.

Not that I'm going to defend hardcore Libertarian theory, mind you. Ultimately, that philosophy is as stupid as Communism.

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RE: Regulation and taxes reduced but prices go up - 7/25/2011 8:59:23 PM

Fellow

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I do not get what it has to specifically do with libertarianism? I thought private companies pricing their services as they see fit is general capitalist principle.

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RE: Regulation and taxes reduced but prices go up - 7/25/2011 9:14:46 PM

joether

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quote:

ORIGINAL: Fellow
I do not get what it has to specifically do with libertarianism? I thought private companies pricing their services as they see fit is general capitalist principle.

I believe its to say, that if taxes are lowered, that companies will 'past the savings' onto the customer. And unfortunately in this example, those same companies simply jacked up the prices to make additional profit. Its rather amusing that the libertian philosophy fails to understand one fundmental aspect of capitalism: capitalism has no mechanism to control greed. In an industry with few competitors (i.e. the airlines industry), if a tax is reduced or eliminated, what really keeps all the companies from simply not lowering the cost and keeping the profits?

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RE: Regulation and taxes reduced but prices go up - 7/25/2011 9:45:13 PM

Fellow

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You are talking about modern corporatism not libertarianism. Raise and maintaining of monopolies is much more difficult in libertarian system than in the current system.

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RE: Regulation and taxes reduced but prices go up - 7/25/2011 9:49:21 PM

DomKen

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quote:

ORIGINAL: Fellow

You are talking about modern corporatism not libertarianism. Raise and maintaining of monopolies is much more difficult in libertarian system than in the current system.

Fantasy. Tell me why in the libertarian paradise of late 19th century america the number of monopolies and oligopolies exceeded anything we see today?

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RE: Regulation and taxes reduced but prices go up - 7/25/2011 10:11:51 PM

rulemylife

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quote:

ORIGINAL: WyldHrt

quote:

Am I reading something wrong

Yes. They raised the price the exact amount of the tax they used to charge but are no longer collecting. Now that 7.5% goes into the companies' pockets instead of to the gov't as taxes.

Okay, I'm a little tired tonight so be patient with me.

They were collecting a tax, so how does that justify a fare increase because the tax was eliminated?

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RE: Regulation and taxes reduced but prices go up - 7/25/2011 10:17:42 PM

WyldHrt

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OK, you sell something that has a tax of 7.5%. You have to collect that 7.5% and send it on to the gov't. All of a sudden, the tax is gone. You can either not charge the tax (savings for the customer), or raise the price of the item 7.5%. If you choose the latter, the customer pays the same amount, but you get 7.5% more in pure profit.

Guess which the airlines chose.

ETA- it wasn't actually an either/or. They could have chosen to raise the price by 3.75% and both saved their customers a few bucks and still increased their profit.

< Message edited by WyldHrt -- 7/25/2011 10:24:08 PM >

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RE: Regulation and taxes reduced but prices go up - 7/25/2011 10:39:08 PM

MrRodgers

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quote:

ORIGINAL: rulemylife

Am I reading something wrong or does the author of this article contradict herself?

Reuters) - Many U.S. airlines have raised fares in recent days to take advantage of a lapse in U.S. ticket tax collection after Congress failed last week to fully fund the Federal Aviation Administration budget, but passengers are not likely to notice any price difference.

Then a little later she tells us:

JetBlue Airways Corp and Southwest Airlines Co began raising ticket prices by at least 7.5 percent on Friday, according to FareCompare.com. Other airlines, such as Delta Air Lines Inc and United Continental Holdings Inc, boosted prices on Saturday.

So I'm confused.

How do ticket prices get raised without passengers not likely to notice any price difference?

My understanding of this is that the airlines raised ticket prices the same amount of the federal tax now not being charged. Thus 'passengers are not likely to notice any price difference.'

I type slow ok ?

< Message edited by MrRodgers -- 7/25/2011 10:42:11 PM >

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RE: Regulation and taxes reduced but prices go up - 7/25/2011 10:39:19 PM

Hippiekinkster

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AIn't no guarantee that Congress wouldn't retroactively reinstate the tax. If that happens, the airlines are on the hook for 7.5%, so it makes sense to me that they would keep collecting the tax for remittance at some future date.

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RE: Regulation and taxes reduced but prices go up - 7/25/2011 10:49:00 PM

rulemylife

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quote:

ORIGINAL: WyldHrt

OK, you sell something that has a tax of 7.5%. You have to collect that 7.5% and send it on to the gov't. All of a sudden, the tax is gone. You can either not charge the tax (savings for the customer), or raise the price of the item 7.5%. If you choose the latter, the customer pays the same amount, but you get 7.5% more in pure profit.

Guess which the airlines chose.
ETA- it wasn't actually an either/or. They could have chosen to raise the price by 3.75% and both saved their customers a few bucks and still increased their profit.

That is what I said at the start.

So we don't seem to be in disagreement.

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RE: Regulation and taxes reduced but prices go up - 7/25/2011 10:54:10 PM

WyldHrt

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quote:

That is what I said at the start.

No, at the start you said:

quote:

So I'm confused.
How do ticket prices get raised without passengers not likely to notice any price difference?

I merely explained.

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RE: Regulation and taxes reduced but prices go up - 7/26/2011 5:14:33 AM

Moonhead

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quote:

ORIGINAL: DomKen

quote:

ORIGINAL: Fellow

You are talking about modern corporatism not libertarianism. Raise and maintaining of monopolies is much more difficult in libertarian system than in the current system.

Fantasy. Tell me why in the libertarian paradise of late 19th century america the number of monopolies and oligopolies exceeded anything we see today?

"There are two novels that can change a bookish fourteen-year old’s life: Tolkien’s Lord of the Rings and Rand’s Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other involves orcs."

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