To keep airfares down as fuel costs rise, airlines charge fees – some of which are federal-tax exempt – for reservation changes, seating, early boarding, meals, entertainment and baggage. Untaxed baggage fees in particular have generated $12.8 billion for airlines since 2007. If taxable, the revenue would help federally fund the air transportation system.
Bag fees are a tax dodge for airlines because ticket prices are taxable and bag fees aren’t. Taxpayers end up making up the difference to fund the aviation system.
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