Originally posted by Butcher Bird:
I would say very near zero.
The slightly longer answer is that taxing such miles would be an incredible nightmare. Undoubtedly the cost would exceed the benefit.
There are innumerable posts on this. You might want to start with "taxation" or "IRS" and run the search engine.
Yes,it was one such message that actually prompted my inquiry:
It was from a Canadian who said that Canada was already taxing miles received from business travel that was tax deductible. Apparently the business just includes a value of the miles as part of your income.
But the IRS doesn't have to tax the flyers, just the business. They can treat it as a rebate to the business which has to be deducted from their deductible expenses. I think that the IRS has actually tried some variant of this in Florida.
Also I had my own hassle with the IRS in deducting miles as a donation. They finally let me claim the donated miles as a deduction, but only after a hassle and proving that I had earned all the miles on my own paid travel. They didn't really allow it, they just said they weren't contesting it as of now.
I don't think taxation of flyer miles earned on tax deductible flights is at all impossible, particularly if it now the practice in other countries.
Bruce