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[quote user="Falcon48"] In response to Sam1, I don't think it's at all appropriate to treat the "spread" between Acela fares and regional fares as a "subsidy" because the passengers paying them may pass the costs on to their customers or clients.  The same can be said of virtually any expense incurred by a business traveler that's reimbursed by his/her employer.  For example, put that "high level manager" paying the Acela fare on an airplane.  The air fare will be passsed on to customers or clients the same as the rail fare. Why isn't that a "subsidy" to the air lines?  And, based on this theory, why would you distinguish between the regional fare and the Acela fare at all?  After all, if the manager uses a slower regional train and pays the lower fare, that fare will similarly be "passed on" to his/her customers or clients. Further, on the corridor, even the regional fares will likely be higher than Megabus.  Is that "spread" a "subsidy" too?  And let's not stop with rail fares.   How about cost of the nice hotel room and  meal the manager had while on his/her trip.  Those, too, will be ultimately "passed on" to customers or clients.  Are they "subsidies" to the hotel and the restaurant?.  Or are they "subsidies" only to the extent that the costs exceed the price of a Motel 6 room and a Big Mac.? The fare actually paid for the service received by the passenger is not a "subsidy", regardless of whether it is "high" or "low", and regardless of whether it is ultimately passed on to customers, clients or strockholders as part of a business' cost or price structure or the value of its shares.  To call user charges like this a "subsidy" would mean all expenses incurred by business people and reimbursed by their employers are "subsidies" to those who provided the goods or services for which they were incurred,  In the case of rail fares, that would mean that the only fares that wouldn't be "subsidies" would be the fares paid by non-business travelers. [/quote] The issue is whether the premium fare that is paid by someone traveling on an expense account is a subsidy to the carrier or vendor.  As I noted, it applies equally to any mode of transport, including first class, business class, etc. Are high priced meals eaten by people on an expense account a subsidy for the restaurants that serve them.  The IRS thinks so.  It is the reason a business cannot deduct more than half of the cost of the meal as a legitimate business expense.  And there is an upper limit on the cost of the meal.  It is the reason why all outside of the box travel, meal, and entertainment expenses are constrained by the tax code. The Acela service probably would not be possible without people riding on expense accounts.  On the other hand, if the first class and business cabins on the jet liner went away, the airlines would probably do quite nicely, since there would still be plenty of people to fill the seats in the back.  Come to think of it, on Southwest, Jet Blue, etc., there is no first and business classes.  And they appear to be doing OK. Clearly, what is a subsidy depends on one's views.  As I mentioned, most people really get torqued up when I tell them that the ability to deduct the mortgage interest, property taxes, and capital gains on their homestead on Schedule A and D is really a subsidy.  I guess it depends on whose Ox is being gored.
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