Mileage Plus: Tax Scam?

[BDS]

I recently booked my tickets for a vacation in England, using my Mileage Plus credits. Of course the entire mileage plus system (in which travelers earn free flights for frequent flying) is a tax scam – it offers business travelers a tax-free bonus for traveling on business.

The Airlines like it because it creates brand loyalty. Business travelers want to stick with one airline (even if it’s more expensive) to build up their mile credits. Business travelers like it because they get free vacations (like I just did). But the whole thing is basically tax fraud – it offers tax-free bonuses. Not that I feel particularly guilty myself, mind you……

[California Tanker]

It's already been taxed.

You paid your tax on it when you bought the initial sets of tickets. Instead of paying $189 plus tax for just the flight way back when, you paid $199 plus tax for the flight, plus mileage credit with deferred delivery. Take twenty of those flights, and take your deferred 'Free' flight which is, in actuality, pre-paid.

In other words, the person being defrauded is effectively yourself. The airlines certainly don't do it if they're going to lose much money on the ticket, the government gets its tax money earlier than if you waited for the 'Twentieth' flight, and the money is out of your account and thus you're not getting any interest on them.

Furthermore, all those flights which you take to accumulate miles but you never turn in (Let's say you rarely fly one particular airline, but they're the only people to fly to that location), involve the extra expense for 'flight credit', which is never redeemed and is instead simply kept by that airline, and by Uncle Sam.

Happy to brighten your day...

NTM

[BDS]

I may not have explained myself very well (or I don’t understand you, CT). I may have paid a sales tax, but I didn't pay any income tax.

The deal is that most companies allow employees to use miles they earn from business travel for personal travel. So my Company DID pay a sales tax on the tickets, but if I had earned the $1200 my tickets to London would have cost (had they not been free), I would have had to EARN $1600 (or more) and pay $400 in taxes to have $1200 left over to buy the tickets.

The free tickets were bought with company money, in effect. True: any sales tax (and airport tax, etc.) has already been paid, but no income tax has been (as far as I know).

Basically, the $1200 ticket to London was paid for by my company, and I paid no PERSONAL taxes on the “free ticket income” I earned by flying around the country on my Company’s behalf.

p.s edited to clarify: P.S. When my company bought the tickets, they wrote it off as a business expense, so they aren’t paying any income tax for my $1200 flight, either. Of course, they would have written off a $1200 bonus, too. But I would have had to pay tax on it, after which I couldn’t have afforded to buy a $1200 ticket. It’s basically a way of giving business travelers a tax-free bonus (it seems to me, anyway).

[California Tanker]

Oh, that's different.

The Government is the same way: For example, if I'm travelling on a Government ticket, and they ask for volunteers to be bumped, if I volunteer, I get to keep the bonuses, free flight, and whatnot for myself. It's designed to encourage business travel, and is not so much a fraud as a deliberate cut/incentive.

NTM

[Waluigi]

I remain one flight away from a free ticket on United. I've had to take American my past two trips because I couldn't get United flights when I needed them.

Now I have the worst possible situation: a bunch of miles on two different airlines but no way to use them! I used to have 15,000 miles on U.S. Air, too, but those were going to expire so I donated them to the Make A Wish Foundation.

My beef is not that I have all these miles I can't use, it's that I have to travel for my job on a monthly basis. I'd rather have no miles and be able to put my son to bed every night. Alas...