By John W. Schoen Senior Producer
msnbc.com

Reports of Delta Airlines' ongoing struggles to stem its losses, and the continuing talks with its pilots union, has Eileen on Long Island wondering if she should buy a Delta ticket for a trip in March. Meanwhile, Thomas in New Hampshire wants to know why divorced parents who pay child support don't get a break on their taxes.

I am planning a trip to Italy at the end of March. I found the best prices on Delta. I am a little afraid because of strike and bankruptcy talk. Would it be wise to book a flight on Delta at this time?
Eileen D., Riverhead, N.Y.

Ironically, bankruptcy usually poses very little problem for an airline's passengers. (Stockholders, on the other hand, will very likely get clobbered.) Delta, which lost $1.1 billion in the third quarter alone, has already gone to court for what’s called “bankruptcy protection” while it tries to work out a plan that can get it back to making money. Technically, that means the airline doesn’t have to pay its all its bills until everyone agrees on who gets what, and the bankruptcy judge signs off on the deal. (Last week, the judge told the airline it has until July to work out that plan.) Shareholders, the last to get paid, will likely get nothing. So the usual scenario is that the airline keeps flying while the lawyers, investment bankers, creditors and unions argue over where the money goes. 

A strike, on the other hand, could throw a serious wrench into your plans – if it succeeded. But that’s a big if. Northwest Airlines managers recently demonstrated that the company was able to continue operating after mechanics walked off the job (with some major disruptions in the first week or so) by lining up replacement mechanics. That was possible largely because the pilots union didn’t back the mechanics.

In Delta’s case, the pilots union is the one to watch. Delta pilots recently agreed to a 14 percent pay cut – on top of a 33 percent cut last year – and agreed to keep working until March while they negotiate a comprehensive, long-term contract. (Some 42 percent of the pilots voted against the latest round of cuts, so there are plenty of them who aren’t happy with the way the talks are going.) The deadline for the current round of talks is March 22.

The big issue now is the pilots’ pension: Delta has been holding back payment to their pension plan; the pilots want the plan fully funded. If the two sides can’t come up with a deal by the March deadline, a three-member arbitration panel would decide the terms of the new contract. But the pilots’ union chairman has said, in a letter to pilots, “We will not work willingly without a contract.” So the threat of a strike is still out there.

Both sides realize that a strike could be the end of the line for Delta. If an airline shuts down for any length of time, it's extremely difficult to start it up again, especially if customers like you stop buying tickets. So nobody wants a strike. But union negotiations can get messy, with unpredictable results, as New Yorkers discovered last month when the subway system shut down for three days after transit workers walked – despite a law saying such strikes are illegal. While, at this point, a Delta strike appears unlikely, it’s impossible to rule one out.

Where does that leave you? It means you have a chance to save some money with a cheaper fare in return for the small (but real) risk that your flight could be canceled. Still, given the state of air travel these days, the risks of a snag – from an overbooked flight, a missed connection, bad weather – are there for everyone. You’ll just have to decide if you’re willing to put up with one more.

Why isn't at least a portion of my child support tax deductible? For the support payer, in many situations, this causes them to claim more deductions so they can try and replace the take home income for their needs. But the receiving end gets their portion "tax free." My thoughts are that maybe more people would pay their child support properly if something was implemented.
Thomas M.,N.H.

We can't presume to explain the reasoning behind the U.S. tax code. (Which assumes, of course, that there was any rational thinking behind it at all.)

But we suppose it might not be very popular politically to give divorced parents paying child support a tax deduction for the same expenses that married parents pay without getting a deduction. To be sure, the tax code has all sorts of hazards for divorced parents: we're not saying it's right. But then there’s not much about the current tax code that’s “right” or even fair. The Alternative Minimum Tax, for example, was supposed to make sure “rich” people paid their “fair share.” But the genius who cooked it up forgot to index it to inflation. So now you don’t have to be a rich person to be taxed like one.

It's also true that, to the extent the tax code is used to encourage behavior that Congress finds desirable (deductions for mortgage interest to encourage home ownership, for example), that many members of the current Congress seem to believe that divorce is antithetical to the "traditional family values" they profess to hold dear. So if you believe that the tax code is a legitimate instrument of social policy (which we don't), then it's not a big stretch to assume these members believe that the tax code should make life easier for couples who stay married and harder for those who get divorced.

Again, we don't agree with that way of thinking. And it gives our Congress a lot more credit than it deserves to say that the tax code has any overall "design" whatsoever. Many of these updates to the tax codelaw are passed in the middle of the night, stuffed in hundreds of pages of legal verbiage about a with only a handful of those who vote actually taking the time to read describing what they're voting for.

By the way: by all means, claim as many deductions as you can. But while claiming more deductions that you're legally allowed may give you a short-term boost in cash flow, it's not a good idea. If you get caught, the penalties will more than offset the initial benefits.

 

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