[librish]

It's insanely smart to reward business travelers personally based on how much their company spends. A lot of people working for big companies are completely price insensitive, and might in fact choose a worse and more expensive flight if it means they get to accrue more miles.

[FireBeyond]

Sales, architects, consultants at my company (all the frequent fliers) lost their shit when we mandated the use of corporate cards for all travel.

"Earning enough points to take my family on a free vacation each year is compensation for the time I'm gone"... "My wife and I get upgraded most trips we take because of this benefit"...

Actual tone-deaf quotes at a time when we were laying people off (not to mention that corporate cards had been around for a while and had been 'encouraged'. And most other managers had already mandated their use.

It's a perk. But when it's a perk only some people get, or get more of, you can't expect too much sympathy from everyone else when it's taken away.

[ttegloma]

It’s disingenuous to call it a “perk”. It’s not the same as having office coffee or a ping pong table at the office.

Having to travel a lot is a known disadvantage of having one of these jobs. The ability to accrue miles or do in-lieu travel is touted as an offsetting factor for this. It’s literally mentioned as a part of the compensation package at places like job fairs or in interviews. In my past consulting job (and on places like r/consulting), people would literally calculate the dollar value of the miles/status you can accrue and would use it to compare compensation packages.

Losing this “perk” is more akin to having commission pay be a big part of your compensation, but then being told you’ll no longer get commission. It’s a material difference to what you expect to be paid.

[FireBeyond]

While the ability to accrue miles for miles traveled wasn't removed, I'll bet that that's the only thing 'offered' in the employment documents (typically the handbook).

I'd challenge anyone to find an employee handbook that specifically references expense reimbursement in this context. Indeed, ours has always said "corporate cards should be used whenever possible". This was just changing to more forceful language.

[g_sch]

Back when I was in consulting, I used to think of it as a perk (as did many of my peers). Once the travel started to wear on my personal life, I ran the numbers and discovered the miles and points I was earning equated to only around $200-300 per month in cash equivalent value.

It's really surprising to me how intensely some people will pursue relatively worthless airline miles. I suppose if you're going to be traveling anyway, you might as well pick them up. But if you have the choice, it's not really worth the trade-off.

[ProfessorLayton]

Yeah, I hate traveling for work, and if I could pick I wouldn't do it. Worse, I hate keeping track of every receipt and expensing every little thing post work travel.

I'd take a company card any day.

[somsak2]

This is exactly why I'm often confused about cuts to these kinds of programs from companies. The downside of people frustrated with the cut cannot be worth it from a monetary perspective. Even if you reduced how many raises you were going to give out, I think people would care less than "I no longer get upgraded for flying"

[rrrrrrrrrrrryan]

> when it's a perk only some people get

They aren't comparing their situation to others within the company, but rather to individuals at other companies for whom this perk is widely available.

[heresie-dabord]

From the OP:

> Is this a good deal for the American consumer? [...] Certainly the system is bad for Americans who don’t have points-earning cards. They pay higher prices on ordinary goods and services but don’t get the points, effectively subsidizing the perks of card users, who tend to be wealthier already.

It's the economics of "scrip". https://www.investopedia.com/terms/s/scrip.asp

[solarkraft]

It's funny that that's even possible.

For my next business, I'll personally pay companies' decision makers to choose me as a supplier.

Hell, why stop there? I'll also pay politicians and judges to rule in my favor!

[dave78]

At my current employer, it is quite difficult to get a new supplier approved into the system, so any time you need to acquire something for work that is not from one of the usual places it is nearly impossible.

Someone must have spotted the opportunity, because we have one particular supplier who is approved, and basically you send them a list of what you want from whatever store/supplier/etc., and they send back a quote for the item(s) which is just the retail price plus a 10% markup. You order the item(s) from this approved supplier, and they just order it from the original source and have it shipped to you. A huge portion of the things that we needed to get for day-to-day usage ended up being ordered through them (software, lab equipment, hardware debuggers, etc).

Seems like a great gig if you can pull it off. Most likely this is just a 1-person outfit where they spend 30 minutes a day placing orders and generating quotes then just take their 10% of everything. I've always wondered if this business was started by someone who formerly worked in the procurement department and added themselves as a supplier before leaving.

[daniel_reetz]

I saw a similar business, which was run by someone with a severe physical handicap. Orders with them could basically get around most purchasing card or procurement issues, and they added a percentage. Seemed like a really nice business.

[TeMPOraL]

This might be a win-win. They may earn 10% on every order going through them, but they also do the paperwork and probably take some degree of liability off your employer. Middle-men aren't always a problem.

[bombcar]

They're also almost certainly enabling the company to float 30-90 days, which itself has some value (suppliers often give you a discount for paying within 30 days).

[Metacelsus]

Sounds like VWR for ordering lab supplies.

[briffle]

This isn't new at all. Why do you think those big companies have company "boxes" at major sporting stadiums? its certainly not so their rank and file employees can enjoy the game.

or golf trips, fancy dinners, etc.

[itsoktocry]

>For my next business, I'll personally pay companies' decision makers to choose me as a supplier.

What you describe is one end of the spectrum (and probably illegal). But the line between that and good old discounting isn't very wide.

discount -> p&l -> budget -> bonus

[dylan604]

Since when was business solely run on decisions that were bounded by what was legal?

[teaearlgraycold]

> I'll also pay politicians and judges to rule in my favor!

Now you're getting it!

[joelfried]

So is Justice Thomas.

[djkivi]

Why stop there? Lots of other "big guys" in politics.

[pauldenton]

Justice Thomas doesn't demand 10% off the top. Justice Thomas never got prosecutors fired because they were investigating his son's company.

[pavlov]

> “reward business travelers personally based on how much their company spends”

Shouldn’t this be taxed as income?

A portion of the money paid by company A to company B goes directly to the employee of company A. It would be taxable if A paid its employee directly, so what difference does it make if there’s a benefit program operated by B in the middle?

[QuarterReptile]

It gets discussed from time to time.

As a government employee, I'm pretty jealous. All our spending has to go through a credit card with no perks, rewards, or identifiable appeal, presumably because it makes the data harvesting easier. And you have to identify on the front end whether each thing is a valid expense so you know which card to use, rather than just filing relevant line items in a claim on the back end. The only good thing about the government travel cards is that they're physical objects, so you can sometimes lose them and then get to fall back on a card that does something for you.

[matsur]

https://tax.thomsonreuters.com/blog/are-employees-taxed-on-t...

[pavlov]

Interesting, thanks.

The guidance is from 2002. The airline reward programs have changed in the meantime. As the original article notes:

”In short, SkyMiles is no longer a frequent-flier program; it’s a big-spender program.”

So I wonder if the IRS might come to feel that rewarding spend is different from rewarding miles flown. Unlike air miles, the benefit to the employee is in direct proportion to the money spent by their employer.

[lotsofpulp]

I doubt it. The IRS does not say cash back rewards from credit card spend is taxable income, which is as explicitly rewarding spending as you can get.

https://www.investopedia.com/ask/answers/110614/are-credit-c...

> So, where do cash-back reward programs fit in? It varies. If a cash-back reward is credited directly to your credit card account, then the income is generally considered a nice rebate that comes with the benefit of using the card. If you actually receive a cash-back check directly, though, it gets a little trickier: It probably also would be considered a type of rebate, but it could technically count as income.

[PopAlongKid]

> IRS does not say cash back rewards from credit card spend is taxable income

No, it's just a rebate/discount made directly to the purchaser. For tax purposes, if they buy something for $100 and get a $2 cash back, it just means they spent $98.

It's very different when there's a third party - employee - involved. The "reward" is going to someone who never spent any money, and so generally would be considered taxable compensation to them. OF course, regulatory exceptions in the tax code are nothing new, and it seems like this might need to be re-visited soon.

[lotsofpulp]

That is a good point. I guess it might be too complex to keep track of what entity paid for which points and so they let it slide.

[pavlov]

But is someone getting personal cash back rewards from corporate credit card spending?

That would be the equivalent of the airline situation.

[stefanlindbohm]

This is how it works in my country (Sweden). Everything that provides any sort of personal benefit to an employee is taxed as ”benefit tax” which simply increases the taxable income. Very few exceptions exist for small yearly gifts, health benefits and a few other things.

[gdprrrr]

It has to be taxed as income according to recent court rulings in Germany. Alternatively, any earned bonuses can be used for the benefit of the company, eg for The next travel.

[adolph]

> It's insanely smart to reward business travelers personally based on how much their company spends.

I wonder how long it will take the IRS to catch on and see this as a taxable benefit. It's like if significant business spending was done on Discover cards that paid its signer personally. Since it's been going on for years, maybe there is an exception written in law?

Speaking of taxes, the guy who bought a billion yogurt cups to earn trillions of miles donated the yogurt and received a tax benefit:

https://www.snopes.com/fact-check/pudding-on-the-ritz/

[nerdponx]

The ability to accrue miles/points/whatever for yourself is considered one of the offsetting perks of having to travel a lot of work. So strong reward programs for frequent business travelers is indirectly a product or service being offered by the airlines to companies that employ business travelers, which employers implicitly pass along to travelers as a form of soft compensation.

[BoiledCabbage]

You have it backwards. Airlines aren't paying customers and companies are paying the payment forward to their employees. Employers are paying their employees and funneling it through airlines.

At a deeper level airlines and business travelers have no real business relationship. Employers are buying a service, airlines are selling a service. Business travelers are the "cargo" that airlines are shipping. Businesses pay airlines to ship this cargo. Airlines have no relation to the cargo.

Employers also pay the cargo (their employee) a wage. But they funnel part of that payment wage through airlines via miles. It's not much different than company sponsored health care, but it's company sponsored vacation/personal travel. It's an employer benefit, but not treated as one.

[nerdponx]

I think we're saying the same thing. What I was trying (poorly) to say is that the airlines offering the employers the ability to compensate their employees is indirectly a service that airlines offer to employers.

[ttegloma]

It’s not just a reward for the business travelers. My previous consulting company actually would want us to book our preferred airlines (even if they were more expensive, but only within a certain range) because in the event of an issue with the flight, the perks to rebook or get free checked bags etc actually saved the company/client money.

I saw this for real when traveling with a coworker when they had status and I didn’t. One of our flights was delayed, leading to me being stranded overnight and have to get the company to pay an additional $300 to stay in a hotel, while my statused coworker was rebooked with priority on a flight home due to their status.

[enkid]

Not just big companies, government travellers too. There's a reason military is allowed to board first.

[badcppdev]

What's the reason? I assume this is a US thing?

[callalex]

It’s similar to tipping, once one guy starts doing it all the others look like assholes unless they start doing it too. A similar phenomenon happens sometimes in drive-through coffee shops: someone will pre-pay for the coffee of the person behind them in line, then that person is informed that a stranger paid for their coffee. There is then a social expectation to do the same thing for the next person in line to keep the chain of anonymous “charity” going. Nobody wants to be the asshole that breaks the chain. It’s certainly an odd phenomenon, but many people love it.

[myroon5]

https://www.youtube.com/watch?v=52LJaWDdG9c

[enkid]

The stated reasons is patriotism. The real reason is that the military buys a lot of airline tickets and the military member gets to choose from a list of flights from a variety of airlines.

[bombcar]

Military also are allowed more than the normal allowance of baggage and carry-on for the same reason.

Families with children are also allowed to board early, because they slow down the boarding process otherwise.

[QuarterReptile]

I suspect that one airline made the first step with that, and it was name-and-shame until everyone fell in line at that point.