Lower Taxes Do Not Mean More Money For Airline Passengers

Logic tells us that if the government would lower taxes, Americans would have more money to spend.

I do not think that is true.

What would most likely happen is that businesses would increase prices on products that would equal any tax reductions.

Is this just my personal theory?  No.  It is playing out right now.

As I wrote in an earlier , the House of Representatives is blocking funding for the FAA, which means the U. S. Government cannot collect taxes applied to the airline tickets passengers purchase.

That should mean airline passengers are seeing a reduction in ticket prices to match the amount of taxes not being collected.

But what is happening is that many airlines are actually increasing their ticket prices to match the amount of taxes the government is not collecting.  They believe, rightly so, that most Americans won't notice.

As The Consumerist website says this airline trick is "effectively a price hike".

The real question is when the FAA begins collecting the tax again, will the airlines lower ticket prices or just add the tax back on to the raised cost of airfare?

Any guesses?