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Slowing Your Ability to Make Money So The Government Can Make Money

May 27, 2014

Years ago, an ambitious sibling gave me a t-shirt of a Far Side cartoon where Einstein actually discovered that time is money.  I agree, though I think the charge rate is variable.  There are plenty of things I can do where my time is pretty much free, and many others where I’ll charge double my internally-considered hourly rate if I have to do something that dumb.

But apparently, the government doesn’t subscribe to that type of equation, notes Reason Magazine:

The IRS announced in 2002 that it wouldn’t try to go after individuals for income taxes on frequent flyer miles or hotel loyalty points earned on company-paid business trips.  Yet the temptation to wring some tax revenue out of the vast non-dollar economy of Starwood Preferred Guest Starpoints, Marriott Rewards points, American Airlines AAdvantage miles, Delta Skymiles, and so on is apparently so great that that the government just cannot resist.

Sure enough, the Tax Foundation, a research group that tracks tax issues, flags a recent post on the View From the Wing blog that runs under the provocative headline, “The IRS Looks To Be on the Verge of Imposing a Big Tax Burden on Loyalty Points.”

The actual “big” burden isn’t that much, though it’s enough to cause pause to anyone who travels a lot, like I do.  There are plenty of people who travel more than I do who really take advantage of the customer loyalty programs, finding all sorts of ways to add to the hotel or air miles.  Me, I just collect what I get, and use them for the occasional vacation trip.  So a moderate reward for busting my tail suddenly becomes a mark on my income that I have to track and report, lest I be out of compliance with the Feds.

But more to the point, time is money.  How much time would we have to spend tracking and reporting the miles?  Sure, Alaska Airlines has a fine report on my mileage every year, and they could easily turn it in… with the creation of a new system and appropriate government checks and balances in place that would take resources, and — gasp — time to create.  That’s cost to them.

The time to me is not inconsequential either.  It’s extra time spent on taxes, and ensuring that the random trip I took on United that year got tracked.  And what if I have to track down a report from some fly-by-night place that gave me a reward and reported it, but got my address wrong when they sent the folder?  Now I need to track it down.

So the government, in an effort to pick up a bit of tax revenue, is potentially going to inconvenience a variety of industry players and individuals.  It’s typical of a government, which is focused on growing at the expense of business or worker productivity.  Maybe they can offer me rewards points that validate my time spent on doing work to pay them taxes… because then they can tax it.

3 Comments leave one →
  1. May 27, 2014 11:19 am

    Maybe the whole point here is to grow government, even if it makes no fiscal sense.

    • May 27, 2014 12:26 pm

      Probably, but that implies a sentience in the body of government that makes me want to live farther back in the wilderness.


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