FOR EVERTHING ELSE, THERE'S TAXES: WHY CREDIT CARD REWARDS SHOULD STOP BEING PRICELESS

Abstract

The simple swipe or tap of a credit card creates ripple effects that impact people and parties at every stage of the economic food chain. Throughout the last century, the credit card industry has been allowed to grow with practically no hindrance or foresight of its repercussions. Furthermore, the sector has been a welldocumented engine of increasing financial inequality, representing an area of the economy that necessitates more forceful regulation. Legislation regarding the credit card industry has largely focused on increasing and clarifying consumerfacing disclosure and stamping out its most predatory practices; however, these laws have been unable to make meaningful progress in advancing financial equity. This Note argues that increased financial equity in this industry can be achieved by taxing the rewards that people earn from their credit cards as if those rewards were regular income. By engaging in such a taxing scheme, the U.S. Congress, the Internal Revenue Service, and the courts can set an effective example and signal that the credit card industry can no longer act as an unrestricted private marketplace operating outside the norms of taxation.

Headnote

Abstract: The simple swipe or tap of a credit card creates ripple effects that impact people and parties at every stage of the economic food chain. Throughout the last century, the credit card industry has been allowed to grow with practically no hindrance or foresight of its repercussions. Furthermore, the sector has been a welldocumented engine of increasing financial inequality, representing an area of the economy that necessitates more forceful regulation. Legislation regarding the credit card industry has largely focused on increasing and clarifying consumerfacing disclosure and stamping out its most predatory practices; however, these laws have been unable to make meaningful progress in advancing financial equity. This Note argues that increased financial equity in this industry can be achieved by taxing the rewards that people earn from their credit cards as if those rewards were regular income. By engaging in such a taxing scheme, the U.S. Congress, the Internal Revenue Service, and the courts can set an effective example and signal that the credit card industry can no longer act as an unrestricted private marketplace operating outside the norms of taxation.

INTRODUCTION

Air travel in the early part of the twentieth century has often been referred to as the golden age of flying, and it was a time marked by elegance, opulence, and extreme exclusivity.1 Airlines had piano lounges on the upper floors of their aircraft, served substantial meals to passengers in all classes of service, and travelers generally dressed up before boarding a flight-a far cry from the chaos that can define a trip to the airport today.2 Yet, before 1978, air travel was a luxury out of reach to most people.3

The wave of cheaper and more accessible travel began in the late-1970s as the U.S. federal government began the process of deregulating the airline industry.4 The Airline Deregulation Act of 1978 (ADA) completely transformed the marketplace by doing away with the regulatory body that had long controlled air travel in the country.5 The passage of this law significantly reduced the federal government's oversight of the sector and opened up the market to more competition.6 Increased accessibility to air travel came around thanks in part to deregulation of the airline industry, but also due to the rise of the internet and the race to charge fees for services that used to be complimentary. 7 Following the ADA's passage, a still-expanding period of wider access to air travel and greater global connectivity has occurred.8 The aftermath of the deregulation has also created a more cutthroat marketplace wherein airlines battle to compete for increased market share through lower fares, celebrity sponsorships, and through loyalty rewards programs bolstered via partnerships with credit cards.9 These rewards programs have become key parts of airlines' business models and have created intensely loyal customer bases.10

Loyalty programs are a form of substitute currency where customers accrue points-or in the case of airlines, miles-by spending money on a company's goods and services.11 The simple objective of such programs is to ensure that customers return to the specific brand offering the rewards, thereby creating repeat customers who develop a habit of preferring one brand over another.12

Airline rewards programs are among the most visible and widely discussed loyalty systems.13 Although now part of even the most casual traveler's vernacular, frequent flyer programs first began in simple form with the little-known Texas International Airlines in 1979.14 In the following years, this model was quickly followed by programs from United Airlines, Delta Air Lines, and American Airlines, who then also formed partnerships for the use of miles and points with foreign carriers across the globe, creating wide-spanning corporate alliances.15 Arguably the most seismic shiftin these loyalty programs arrived in 1986, when the first co-branded credit card between an airline and a card issuer entered the marketplace, permitting consumers to earn miles while using the card for everyday purchases.16

Although these first cards were relatively simple in their accrual of rewards when compared to those of today, they laid the groundwork for the current complex credit card marketplace, and it is through their rise in popularity that the points industry began to grow exponentially.17 The most recent innovation to the loyalty landscape was the rollout of proprietary rewards programs offered by credit card issuers-rewards that had no attachment to a single airline or other company.18 These systems now allow credit card customers to transfer points accrued on a card to a vast array of airline, hotel, and business partners-creating the complex and intertwined system that exists today.19

This structure has led to a burgeoning sub-culture of individuals and websites who offer insights and analysis on how best to decipher these highly complex partnerships and loyalty programs to receive travel benefits, free flights, and more.20 This interconnected web has led to the creation of an industry within an industry wherein determining the valuation and potential uses for accrued points has become its own robust business.21

A new generation of travel influencers and media companies has emerged within this crowded marketplace-all espousing a sleek image of what travel could be with the appropriate usage of a credit card.22 One might be remiss for thinking that the "golden age" of air travel has returned after taking a quick glance at social media accounts that focus on how to maximize credit card rewards programs.23 The internet is littered with articles and videos preaching the gospel of credit card rewards and how best to use them to unlock a seemingly unfathomable world of luxury travel and experiences.24

Hidden behind this veil of elegance, luxe, and ease is a darker truth: these rewards are built and funded on the backs of an inequitable system that exploits those who are unable to access the exclusive world of credit card rewards. 25 People in lower socioeconomic classes pay for these ever-increasing benefits-those with weaker credit scores, those unable to make their credit card payments on time, those who are underbanked, those who pay with cash, and those unable to obtain a credit card in the first place.26

The credit card rewards marketplace is funded by interchange fees-the group of fees that a merchant pays to a card issuer to cover the cost of processing each credit card transaction.27 Credit card interchange fees can range from a mere 1.5% of the total purchase price to close to 3% for purchases made on the most exclusive credit cards.28 Most smaller merchants are unable to negotiate lower interchange fees and are leftwith no choice but to pass these costs on to consumers.29 It is precisely these interchange fees that have become a focal point of recently proposed legislation.30

In 2022, Senator Dick Durbin (D-IL) and Senator Roger Marshall (R-KS) first introduced legislation that sought to rework how merchants process credit card transactions.31 Although their first attempt was blocked by pressure from lobbying groups, the bill has been reintroduced as the Credit Card Competition Act of 2023 (CCCA) and has garnered the support of many interested parties, primarily among retail and consumer-focused groups, and it has again been opposed by the credit card industry.32 If passed, the CCCA would require that each card in circulation be able to utilize a card processing network other than the two largest networks-likely those of Visa and Mastercard.33 This requirement would hopefully create more competition over interchange fee processing and, ultimately, lower fees.34

Unsurprisingly, this bill has been met with opposition from banks, credit card issuers, and the world of credit card rewards devotees, as they confront a future wherein companies may not be able to offer lucrative rewards in such bountiful proportions.35 The CCCA has also been criticized by executives of the country's largest airlines, who are loath to lose any of the massive amounts of revenue they receive via their co-branded credit cards that feed into their mileage "currency" systems.36 Additionally, given the importance that consumers in the United States place on receiving these vast rewards and the profits the credit card industry reaps from individuals using their cards, credit card issuers and banks are likely to raise prices and fees on other services to maintain this profit status quo if the CCCA is passed.37

Yet, even with their keystone position within the American economy, data continually suggest that credit cards are a source of great financial inequity.38 As banks continue to reap record profits, average consumers have little agency in the market, and the system has worked only to further increase the wealth stratification that has ballooned in recent years.39 Household debt has also risen precipitously, suggesting that consumers may be relying upon credit cards merely to meet basic needs and expenses.40

The regulatory scheme of the credit card industry remains an area that is ripe for reimagination and one that, with the right approach, can begin to shiftthe balance toward a more equitable system.41 The imposition of a tax on credit card rewards thus emerges as a potential path forward to signal both to the average consumer and to the credit card industry that this vastly unequal system cannot continue to balloon without reasonable checks and balances.42 This Note argues that an imposition of a tax on credit card rewards43 is an effective method of achieving increased financial equity, and that effective taxation is essential to engendering democratic practices.44

Part I of this Note provides the history, background, and context for the current credit card marketplace and discusses its unique position in the U.S. economy.45 Part II suggests that taxing of credit card rewards is congruent with the overarching goals of the American taxing scheme and is both viable and feasible.46 Finally, Part III suggests that the imposition of a such a tax is capable of ensuring fairer and more equitable treatment of individuals in the consumercredit economy.47

I. HOW DID WE GET HERE AND WHERE DO WE GO?

How did the credit card industry rise to become the behemoth that it is today, and how has the federal government tried to reign in this system that serves to perpetuate inequality?48 Credit cards have evolved over the course of a generation from a novelty item to one that holds a position of critical importance in the functioning of the American economy.49 The story behind the genesis of the credit card speaks to broader socioeconomic issues, and it tells a unique tale about the explosive growth and entrenchment of consumer-based society.50 Section A of this Part provides an overview of the origin of the credit card industry and offers a description of the current state of the market.51 Section B of this Part describes how the credit card industry is a key driver of inequality in our society and presents data elucidating how credit cards facilitate upward transfers of wealth.52 Section C of this Part reviews past and current attempts to regulate the credit card industry and examines their successes and downfalls.53

A. A Brief History of the Credit Card

The term "credit" has a plethora of meanings in the English language; however, it is most often used to describe a transaction where a purchase of a good or service is made by an individual or entity who then promises to repay the purchase price to a third party, usually with interest, at a future date.54 Economies throughout history have relied upon the ability to access credit as a tool for growth.55 The concept of credit itself is undoubtedly the engine for much economic growth throughout the millennia and the present day.56 In the United States, the roots of the credit card industry can be traced to the colonial era and were heavily influenced by the British and their laws placing property at the zenith of the economic pyramid.57 The history of America's relationship to credit and the roots of the credit card industry are also deeply intertwined with the country's dark history of slavery, Jim Crow laws, and continued white supremacist legacies.58

Throughout the first 150 years of the country's existence, those entities with significant access to credit were largely businesses.59 Only in the early twentieth century did the average family begin to have access to reliable lines of credit to embark on bigger purchases.60 Also impacting personal access to credit was the fact that, although Americans had long viewed debt as a necessary aspect of conducting business, using credit for personal purchases came with certain stigmas.61

Beginning in the late-1850s, the first forays at scale by individuals into the credit marketplace were largely in the form of simple installment plans used to buy durable goods, farm machinery, furniture, and other modern conveniences. 62 The increased prevalence of purchasing items on installment plans slowly began to change consumers' relationship with credit, and by the early 1920s, twenty-five percent of American families had used these purchasing schemes.63 The increased prevalence of these transactions brought the use of credit, for better or for worse, into individual homes across the country.64

The 1950s brought with them arguably the largest shiftin the personal credit marketplace: the arrival of multipurpose credit cards.65 Although various forms of simple "charge cards" had existed as far back as the late-1800s, the introduction of the Diners Club Card in 1950 ushered in the modern era.66 This new card, geared solely toward expenses for travel, dining, and entertainment, promised a new level of convenience for individuals, and the card's early media coverage fantasized of "vacationists" who could travel the globe carrying little to no cumbersome cash.67 The early Diners Club Cards were restricted to use with purchases at certain establishments, required users to pay the balance due in full at the end of each month, and acted as both the issuer and the network facilitating the card.68 The market quickly evolved as other companies, observing the popularity of the Diners Club Cards, began to offer their own products and added innovations such as enabling cards to be used across a variety of businesses, and adding revolving credit capabilities to their cards.69

The 1970s and 1980s brought about a rapid expansion of the credit card marketplace, and the establishment of Visa and Mastercard as the preeminent players in the industry.70 Visa and Mastercard began as card services offered by Bank of America and by a collective of banks in California, respectively.71 Arguably their most important contribution to the industry was their collective push to standardize the acceptance of credit cards at many different businesses for the ultimate ease of the consumer.72 Although acceptance of these cards was sporadic at first, it quickly became ubiquitous and the competition turned away from network range and toward an arms race for which company could offer the most enticing "perks."73 This expansion and standardization allowed smaller banks to partner with Visa and Mastercard so that their cards could be accepted across the country.74

As the credit card industry has expanded, the mechanics of the business have become more entrenched and intertwined.75 Now, companies typically fall into one of two categories: card issuers or card networks-though some, like American Express (Amex) and Discover, serve as both.76 The card networks and card issuers thus work in tandem-or as one entity-to facilitate transactions.77

As rapid expansion of the industry continued, competition between card issuing companies became fierce and the changing of usury laws enabled the credit card's reach to extend.78 The early industry was also riddled with rampant racism and sexism, laying the groundwork for exacerbating preexisting structural issues.79 As the credit card industry expanded, banks and card issuers turned toward offering lucrative rewards and multi-tiered cards to further entice consumers.80

Today, credit cards occupy an almost unique role in the American economy: that of a market dictated "supplement" to the limited social safety net offered by the government.81 Confronted with changing market conditions and the pressures of the cost of living, families and individuals with limited resources are forced to use credit cards at an increased rate, leaving them more susceptible to economic downturns and the onslaught of consumer culture.82

Credit cards have also become indicators of one's ability to acquire a certain lifestyle and have become key players in the telegraphing of one's social status in a consumer-focused marketplace.83 Possessing a premium credit card has become an aspiration for many Americans and has taken on the role of a social marker of a certain elevated socioeconomic status.84 In a society where media constantly force-feeds the image of a certain desirable lifestyle, credit cards and their associated rewards are seen as effective tools to easily access that elusive prosperity with few repercussions.85

B. Engines of Inequality

A main source of funding for these lucrative rewards ecosystems are interchange fees-the cost that a specific merchant pays to a card network when a consumer uses their credit card to purchase a good or a service.86 Interchange fees vary greatly depending on what type of card a consumer uses to make a purchase, with higher-end cards with more rewards commanding a greater fee than more basic cards.87

The extensive penetration of credit cards in retail transactions has incentivized merchants to accept purchases made on all types of cards out of fear of losing business.88 To stay competitive, merchants absorb interchange fees on every credit transaction and bake these costs into every good or service they offer-foisting some of the expense of processing credit card purchases onto those who do not have or are unable to use credit cards.89

In short, consumers using cash, debit cards, or lower-tiered credit cards effectively subsidize those using higher-end cards that command higher interchange fees.90 These subsidies are not trivial, and data suggest that consumers who pay in cash transfer $149 a year to those using credit cards by effectively funding the cost of interchange fees that are baked into all their purchases.91 In even starker contrast, the average consumer paying using their credit card receives, in total, a transfer worth $1,282 from cash payers each year.92 As household income increases, the use of credit cards, and those credit cards with rewards, becomes both more prevalent and more likely to occur-meaning that those with better financial health are able to reap more of the rewards that credit cards can offer.93

Although the inequitable state of the credit card market affects all consumers, research suggests that it has outsized effects on communities of color. 94 For example, the average Black family in the United States pays sixty dollars a year to effectively subsidize the rewards of those in the upper-income brackets.95 Credit card use among white families is significantly higher than in families of color, and Black and Hispanic families are more likely to be underbanked due in part to decades of economic subjugation.96 Rewards-based credit cards work to redistribute wealth in an upward fashion, toward those who need the added benefits less and away from those simply living paycheck to paycheck.97

To qualify for premium credit cards (those with the most lucrative rewards), a credit score of above 670 is oftentimes required and the likelihood of approval increases as annual income increases.98 For many racial minorities in the United States, these premium cards often remain out of reach due to the greater percentage of these populations who have either no credit score or a score that would not qualify them for such cards.99

C. Attempts at Regulation

Congress has made several attempts, with varying degrees of success, to regulate the credit card industry since the start of the twentieth century.100 The courts have also wrestled with the issues of regulation and enforcement, but related decisions have largely entrenched existing practices and have done little to help the average consumer.101

The first major piece of legislation came in response to the minimal disclosure offered to cardholders in the early days of the industry, and the inherently confusing manner in which credit card companies laid out how interest rates were calculated.102 In 1968, Congress passed the Truth in Lending Act (TILA) as a part of the Consumer Credit Protection Act, that worked primarily to standardize disclosure of interest rate calculations, allowing consumers to better understand the overall cost of debt they might incur from using a card.103 Certain companies had begun predatory processes of making it harder or impossible for average consumers to decipher the terms of their credit card agreements, and the TILA streamlined information to consumers to aid their decision-making.104

The passage of the TILA was followed by the Fair Credit Billing Act (FCBA) in 1974.105 The FCBA required that creditors acknowledge a consumer's billing complaints, investigate any billing mistakes, and ensure that creditors could not negatively change a consumer's credit standing during an investigation. 106 Additionally, the FCBA prohibited card issuers from contractually barring a merchant from offering discounts to pay via check, cash, or other forms of non-card payment.107

Also in 1974, Congress passed the Equal Credit Opportunity Act (ECOA), a federal civil rights law that prohibited discrimination by lenders based on any factor other than ability to repay a potential loan.108 The passage of the ECOA expressly forbade discrimination based on "race, color, religion, national origin, sex or marital status, or age."109

The final piece of legislation from the 1960s and 1970s was the Fair Debt Collection Practices Act of 1977 (FDCPA) which focused on protecting consumers from nefarious debt collection practices and worked to standardize debt collection procedures across the industry.110 The FDCPA worked to eradicate the worst practices of debt collection, while also balancing the need for effective and legal procedures.111

As discussed above, Congress has been most willing to regulate the credit card industry via changes to disclosure requirements.112 Its amendment of the TILA-through the Credit Card Accountability Responsibility and Disclosure Act's (CARD Act) passage in 2009-required that companies give additional transparency and disclosure in their terms and conditions to help consumers understand the cost of their debt, added limits to various fees a company could charge, and outlawed certain other abusive interest practices.113 Again, instead of changing enforcement mechanisms and placing the onus on corporations to be more mindful, the CARD Act worked primarily to ensure that consumers were better informed-a helpful decision, but one that placed the burden on the individual to protect oneself against large multinational corporations.114

Although the CARD Act placed limits on some of the industry's most abusive practices, its provisions ate into credit card companies' profits, leading to further unintended circumstances.115 As the CARD Act did not set a ceiling on the charging of interest rates, in response to the legislation, credit card issuers simply raised their rates while ensuring that they stayed in line with the act's minimal requirements.116 These continued steps to maximize profits suggest that the credit card industry will continually adapt to raise revenue whenever certain streams dry up.117

The proposed CCCA builds on the back of these prior regulations and also draws primary inspiration from the Durbin Amendment-passed as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.118 The Durbin Amendment limited transaction fees imposed upon merchants by the issuers of debit cards.119 The stated goal of the amendment was to give consumers and small businesses a fairer playing field in their commercial interactions and to ensure that small businesses were not continually hurt by the raising of interchange fees on debit cards.120

The beneficial impact of the Durbin Amendment's passage has been open to debate, and its influence on lower-income consumers and small businesses has been mixed.121 With the loss of revenue from the amendment, banks began to raise fees in other areas of their businesses, most notably in the pricing structures of their most basic checking accounts; fees that were then disproportionately borne by lower-income consumers.122 The amendment also practically did away with debit card rewards programs and, overall, it has had only minor, if any, benefits on overall consumer welfare-resulting instead in "unintended distributional consequences" that have further hurt the most vulnerable consumers.123 There now exists a growing body of scholarship calling into question the amendment's legacy and beneficial effects.124

II. TAXING AS A TOOL FOR EQUITY

The continued acceptance and prevalence of credit cards contributes significantly to a well-functioning economy, but there are well-documented drawbacks as well.125 It is hard to ignore the fact that the industry perpetuates an inequitable system that transfers capital toward the wealthy-particularly to those who are able to hold and use more lucrative credit cards.126 To combat these inherent inequities and to send a message that the rewards system cannot be allowed to remain unchecked, this Note argues that credit card rewards should be taxed as income.127 The credit card rewards system is an accumulation of income that has effectively escaped the awesome power of the federal government's taxing authority and must be reined in appropriately.128 Furthermore, premium cardholders accumulate and use rewards at the expense of others, undermining financial equity in the economy.129

The debate surrounding the taxation of credit card rewards is varied and diverse, and remains an arena of tax law where both the Internal Revenue Service (IRS or Service) and the Tax Court have been loath to make a first move.130 This Part posits that credit card rewards should be taxed as an accession to wealth that is includable in "gross income" given the broad scope by which that term has been defined.131 Section A of this Part discusses the ongoing debate behind the taxing of credit card rewards and suggests that the lack of tax enforcement is incompatible with the federal government's stated approach to taxing powers.132 Section B of this Part examines the reasoning from IRS pronouncements and recent Tax Court cases as to the taxability of credit card rewards.133

A. A Broad Definition

The term "gross income" has long been afforded a broad interpretation from the IRS, the Tax Court, and the United States Supreme Court.134 The Court laid the bedrock for its current expansive definition of "gross income" in the seminal 1955 case Commissioner v. Glenshaw Glass.135 In Glenshaw Glass, the Court explicitly noted that this term was to be afforded a "liberal construction" so as to appropriately pay heed to Congress's intent to tax all gains except for those that are explicitly exempted.136

Even though the taxing authority present in the United States has been viewed as one of immense power where almost all economic transactions have a taxable component, the credit card rewards system has, oddly, remained seemingly out of reach from this influence.137 In interpreting the wording of Section 61 of the Internal Revenue Code (IRC or Code), the courts and the IRS have deemed that income encompasses everything from employer-provided college tuition to treasure trove.138 Following this line of rulings and decisions, when vast sums of money are accumulating beyond the reach of the IRS and benefitting smaller subsets of taxpayers to the tune of billions of dollars, it begs the question as to how and why credit card rewards are not currently considered part of the definition of "gross income."139

Even with such an expansive view of "gross income," the IRS has been deferential and reserved in its treatment of credit card rewards and has historically narrowly held that most rewards from credit cards are merely lumped into the category of untaxable purchase price reductions-a stance that blatantly ignores key aspects of a rewards transaction.140 Yet, the IRS has been clear in its holdings that when rewards are the product of simply opening a new account or doing something wherein no money is spent to garner a further monetary benefit, the value of rewards is includable in gross income.141 Although free flights, hotel stays, and take-out orders paid for with credit card rewards might seem like clear "accessions to wealth" that oddly occur without triggering taxable events, both the IRS and the Tax Court have been cautious about treating these redemptions as taxable income.142

The forays into regulation by the IRS and the Tax Court have been scattershot and have been distinguished by a, so-called, "Don't Ask, Don't Tell" policy and a manner of judicial restraint, respectively.143 In a 2002 Special Announcement, the IRS noted that it would not pursue enforcement for the use or receipt of frequent flyer miles for personal use that was attributable to business travel.144 This non-enforcement notice still implies a right for the Service to potentially pursue enforcement in the future.145 In a similar fashion, the Tax Court's rulings in the credit card rewards arena have been narrow, deferential in nature, and have lacked the creation of clear guidance.146

In its effective refusal to create a bright-line rule, the IRS and the courts have repeatedly underlined the administrative complexity and difficulty in calculating potential basis in each credit card company's proprietary rewards system. 147 Throughout these decades of inaction and narrow rulings, the credit card industry has only become more complex, intertwined, and profitable.148 The exemption of credit card rewards from taxation deviates from the IRS and Tax Court's usual practices, suggesting that the issue may require further review. 149

B. A Litany of Reasons

The IRS has consistently sent "mixed" signals as to its treatment of taxing credit card rewards.150 In adopting its "Don't Ask, Don't Tell" policy in considering the taxation of rewards, the IRS is ignoring past guidance from both its own body and from the courts in failing to make a meaningful attempt at taxation.151 To justify their inaction, the IRS, courts, and commentators have offered various reasons for avoiding taxation in this area.152

The IRS's most repeated reasons as to why it has not pursued enforcement in the points realm is due to issues of valuation and administrative complexities. 153 Although these are admittedly major obstacles in pursuing effective enforcement, there are building blocks upon which a regulatory scheme could be built.154 There are several potential pathways forward for determining valuation and, with a targeted effort from regulatory authorities, an administratively feasible taxing scheme could likely be put in place.155 Additionally, given the technological sophistication and capital flowing through the credit card industry, placing part of the calculation onus on those profiting from the practice seems a prudent idea.156 With this debate taken into account, neither the Tax Court nor the IRS has completely closed the door on the concept of taxing credit card rewards-leaving the door open for further debate.157

Although the IRS and the courts have not set a clear line in the sand for the treatment of credit card rewards, recent decisions from the Tax Court do shed some light on the matter.158 In 2014, in Shankar v. Commissioner, the Tax Court held that 50,000 Citibank "Thank You Points" that a taxpayer had received for opening and holding a bank account and then subsequently redeemed for a flight were includable as income.159 The court held that the points were taxable as they were essentially equivalent to interest income that the taxpayers had accrued for opening and holding the account.160 The holding in Shankar, though offering some indication of the Tax Court's thoughts on the taxability of rewards, is still indicative of the "Don't Ask, Don't Tell" policy that the court and the IRS have pursued.161

In 2021, in Anikeev v. Commissioner, the Tax Court held that taxpayers who had used their Amex credit cards to accumulate "Blue Cash Rewards" points and then turn said points into cash (by using money orders) had experienced a taxable event with respect to one of the two methods they had employed. 162 The court ruled that by using their points to purchase money orders, which were then deposited to offset their credit card balance, the taxpayers were effectively buying cash and receiving tax-free surplus through Amex points from these transactions.163 Notably, the court held that the taxpayers had recognized no income in their purchase of Visa giftcards that were then also used to purchase money orders.164 The court viewed the purchase of the giftcards as the purchase of products and therefore factually distinguishable from the direct purchase of money orders.165 In its ruling, the Tax Court again stressed that its holding was based on the "unique" facts of the case-holding open the door for further discussion of rewards taxability.166

III. A PATH FORWARD

As the IRS and the courts have noted time and time again, the reach of the definition of "gross income" is broad and powerful.167 Such a broad definition then implies that the IRS, the courts, and Congress should do everything in their power to ensure that income, when realized, is taxed.168 At its heart, the taxing scheme present in the United States operates so as to treat people of similar incomes the same and those of differing incomes differently.169 To ignore these overarching goals is to ignore the core tenets behind the federal income taxation scheme.170 By not taxing credit card rewards, the federal government is losing out on the collection of taxes on gross income, as understood by the term's broad definition from the 1955 United States Supreme Court decision in Commissioner v. Glenshaw Glass.171 A lack of appropriate taxation also implicitly condones a system of financial inequity that permits those in upper-income brackets to remain the beneficiaries of an unequal, upward transfer of wealth.172 This Note readily accepts the realities of the market, the beneficial roles credit cards admittedly play, and the deep preference and affection that consumers have toward the credit card rewards business; yet, it still seeks to pursue a taxation argument for the reasons discussed below.173

Section A of this Part suggests that by passing the proposed CCCA, Congress may unintentionally harm lower-income consumers and fail to achieve goals of financial equity.174 Section B of this Part posits that, in an effort to better and more efficiently move the needle on financial equity concerns, the IRS should take the position that credit card rewards should be classified as cancellation of indebtedness income that is includible in gross income as a clear accession to wealth.175 Section C of this Part highlights the concept that miles and points accrued by business travel and then used for personal use should undoubtedly be taxed even if a broader taxing scheme is not seen as viable.176 Section D of this Part discusses how the taxing of credit card rewards is a beneficial policy decision for the IRS to pursue.177

A. More Harm Than Good

Although past attempts at regulating credit cards have weeded out some of the industry's worst practices, they have not succeeded in specifically advancing full-throated financial equity concerns.178 Instead, Congress has mainly focused on regulation through disclosure.179 This Note argues that a competent and comprehensive tax scheme of credit card rewards would set a clear precedent for the federal government to acknowledge and address the inequity in the marketplace.180

Starting from the passage of the TILA in 1968, Congress's attempts at regulation have been disclosure-focused and have not waded deeply enough into addressing financial equity concerns in the industry.181 The TILA has undoubtedly played a role in clarifying consumer interactions with the credit card industry and has also resulted in improving the comprehension of the terms of card agreements.182 Nevertheless, recent critiques have focused on the credit card industry's use of the TILA's disclosure requirements as a tool for avoiding more substantive changes.183 Although disclosure is beneficial to the consumer at a base level, for the TILA's disclosure requirements to be more effective they must be broadly reimagined to better benefit the consumer and not simply placate the industry.184

The ECOA's passage in 1974 did codify important anti-discrimination guidelines, but its enforcement mechanisms have largely been found to be ineffective and lacking real bite.185 From 1974 to 2017, there were only three major settlements between credit companies and plaintiffs alleging discrimination under the ECOA.186 The sparse successes of claims under the ECOA-viewed in tandem with the continued documented effects of structural racism and sexism in the industry-suggest that the law may be inadequate for engendering more equitable practices.187

Following shortly afterward, in 1977, the FDCPA-which focused on ameliorating abusive debt collection practices-did not completely eradicate these predatory tactics and lacked a significant deterrent function.188 Even with the act in place, abusive and aggressive debt collection procedures continue to this day, and the FDCPA-just like the ECOA-lacks effective punitive mechanisms to deter future violations.189

In the twenty-first century, both the CARD Act and the Durbin Amendment have helped certain constituencies, but, again, their passage has also come with negative impacts.190 With the proposed CCCA merely mirroring the general thrust of prior pieces of legislation, its potential passage runs the risk of having history repeat itself, and it could lead to outsized repercussions for lower-income Americans.191 If passed, the CCCA would amend the Electronic Fund Transfer Act and insert new language that would effectively chip away at the control that the country's largest card processing networks have over processing transactions.192 The bill would require that credit card issuers and banks offer at least two options for transaction processing networks, with one of the networks being one other than the two with the largest market share in the country-hopefully increasing competition and lowering interchange fees across the board.193

Proponents of the bill have focused their rhetoric on how the CCCA would likely help the average consumer.194 Nevertheless, they fail to adequately address how credit card companies will respond if the bill eats into the profit margins of one of the main funding streams for credit card rewards.195 If faced with the loss of profit in these extremely profitable aspects of their business, credit card companies are likely to follow patterns of limiting credit access to and raising fees on lower-income consumers-repeating the same patterns that occurred after the passage of the CARD Act and Durbin Amendment.196 Yet, the federal government does have tools to promote financial equity without allowing credit card companies to further profit from those at the lower bounds of the socioeconomic spectrum.197

B. The Tools of Section 61(a)(11) and Section 108(e)(5)

The Code clearly states that gross income includes "[i]ncome from the discharge of indebtedness."198 Simply put, when a borrower is encumbered by a loan and then is relieved of the need to repay, they have had an accession to wealth in the amount of the forgiven debt and must recognize this as income. 199 There are, however, a number of exceptions to this rule that are clearly stated in Section 108 wherein a taxpayer may not need to recognize income from the cancellation of indebtedness.200 Section 108 is interpreted strictly and, unless a statutory or judicial exception exists, the taxpayer who is relieved of a debt obligation realizes income.201

One of these explicit exceptions is codified in Section 108(e)(5), which states that the cancellation of indebtedness income does not include the reduction of an obligation by the purchaser to a seller-more commonly known as the "purchase price reduction exception."202 Although this may, at first glance, appear to tangentially cover credit card rewards, rulings from the courts and the legislative history behind the adoption of this section of the Code suggest that this was meant to apply only when the circumstances arose out of a negotiation between two parties: the buyer and the seller.203 The IRS has explicitly noted that agreements between a third-party lender and a purchaser to reduce debt are not covered by the purchase price reduction exemption codified in Section 108(e)(5).204

At its most basic form, a credit card is an easily accessible consumer loan with a revolving credit limit that can be used for almost all purchases.205 When a consumer makes a purchase on a card, the charge appears on the consumer's statement and their credit limit is reduced accordingly.206 If a credit card company simply cancelled the debt owed on a consumer's statement, the consumer would clearly recognize income to the extent of the cancellation, as such a cancellation of indebtedness does not fall within one of Section 108's explicit exceptions.207

The banal credit card transaction represents an entanglement of many parties getting a bite of the proverbial apple; still, the core of the transaction remains between the consumer and the seller.208 In making this purchase, the seller (the retailer) has received the full price of the goods or services, and, thus, by offering credit card rewards to the consumer (the purchaser) in the transaction, the credit card company (a third party) is effectively reducing the debt that the consumer owes on the transaction.209 Importantly, this third party's cancellation of indebtedness in the form of rewards points lies outside of the covered seller and purchaser exemption, or any other exemptions discussed previously.210

In gaining these rewards, the consumer has experienced a cancellation of indebtedness (in the form of points that can be redeemed for cash, travel, hotel stays, etc.) from a third-party lender and, thus, has experienced a recognizable accession to wealth.211 By using rewards to purchase goods or services that would otherwise necessitate the use of money to acquire, the consumer effectively avoids incurring additional debt and is relieved of some of the burden that each credit card statement places on their bottom line.212

A transaction made on a credit card that offers rewards is not a true reduction of the purchase price because the seller has already received the total amount post-transaction and has seen no reduction in their own bottom-line by engaging in the sale.213 Rather, by offering rewards to the consumer, the thirdparty credit card company is offering something else entirely-not a "true adjustment of the purchase price" paid for the goods or services.214

This Note readily accepts the administrative and valuation issues inherent in proposing such a taxing scheme.215 Nevertheless, it proposes that credit card companies should instead be required to publicly set a clear cash value to the points a consumer accrues to calculate income (something that most card companies already offer), and, at the end of each tax year, credit card companies could then submit a form showing the cash value of rewards a consumer had redeemed during the year. 216 In support of the viability of this path forward, the IRS has, at times, signaled its willingness to include certain rewards as income-suggesting a salient path may exist to move forward with the aforementioned taxing scheme.217

C. An Argument for Taxing Rewards Accrued via Business Travel

Rewards points accrued by individuals via business travel and then used for personal use should be taxed accordingly.218 Due to a lack of enforcement, individuals in higher-income brackets have been allowed the vast potential to benefit in an inequitable manner by accruing rewards from business-related expenses.219 Past IRS guidance has indicated a willingness to enforce these transactions, yet the Service's recent "Don't Ask, Don't Tell" policy toward enforcement flies in the face of its avowed mission and is contrary to concepts of equity.220

Scholars have put forth potential routes for taxation of these accrued benefits and have underlined that there is nothing in the IRC that explicitly rules out such a taxing scheme.221 One potentially viable option would be to tax these miles as compensation worthy of inclusion in gross income within the meaning of Section 61(a)(1) of the IRC and building offthe expansive view of "income" as defined by the Court in Glenshaw Glass.222 A second option would be to view them as a taxable fringe benefit under Section 61(a)(1) of the IRC and Treasury Regulation Section 1.61-21(a)(1)-as frequent flyer miles accrued via business travel are not listed under any of the specific fringe benefits exempted from tax by Section 132 of the IRC.223 Furthermore, in 1996, the U.S. Court of Appeals for the Ninth Circuit ruled in Charley v. Commissioner that the sale of frequent flyer miles accrued via business travel and then sold to a third-party did constitute gross income under Section 61(a)(1) of the IRC.224 The court's ruling in Charley was limited, but it did demonstrate that miles accrued via business travel are a clear financial benefit conferred upon an employee by their employer.225

As laid out in the Code, the United States has a progressive taxing structure wherein those with higher incomes are taxed at a higher rate.226 The exemption of credit card rewards from gross income is worth more to higher income individuals, and it results in an unfair taxing burden.227 The result of the current scheme is that two employees making the same salary may receive different treatment by the IRS if one travels for work and accrues rewards via any number of programs or credit cards.228 In sum, the current lack of a coherent taxing scheme leads to great inequities in the market and a lack of trust in taxing authorities.229

D. The Why

To use the oft-repeated adage from Benjamin Franklin in his letter to Jean-Baptiste Le Roy in 1789, "nothing can be said to be certain, except death and taxes."230 Although individuals may gripe and grumble about its persistence and prevalence, a coherent and equitable system of taxation is essential to the functioning of a well-running democracy.231 Taxes strengthen democratic practices by funding infrastructure projects, bureaucratic functions, and other essential services, and they do everything from ensuring the United States' national security to funding medical research.232 A progressive taxation scheme promotes a more equitable society that mandates that those with higher salaries and more disposable income pay a higher tax burden.233

Given their importance in continuing and supporting democracy, appropriate taxation schemes are prime mechanisms for balancing the political influence of underrepresented groups and interests.234 For better or for worse, differing tax policies have been used to transform the economy and redistribute power.235 Tax law must then be used as a "nexus" to reformulate and reimagine the structure of United States' form of democracy.236 Its focus on economic difference can help ameliorate the widening income inequality that may be contributing to a decline in trust in democracy.237

Although seemingly immaterial to the greater social and economic issues at hand, the proposed taxation of credit card rewards serves a "communicative" function by showing that the federal government will no longer treat those with higher incomes more favorably than those with lower incomes.238 In allowing credit card rewards to remain untaxed, the federal government is condoning a system that perpetuates inequality.239 With credit card rewards being a documented upward transfer of wealth, an appropriate taxing scheme would ensure that individuals understand that simply having a higher credit score or more lucrative credit card will not permit income to accumulate unfairly.240

CONCLUSION

The credit card rewards industry represents a quintessential story in the American economy: one of rapid innovation, of stark inequalities, and of almost unchecked growth. The federal government, and specifically the IRS, has allowed this industry to grow almost unchecked for too long, and the area necessitates more direct regulation and enforcement. The inherent equality issues present in the credit card rewards industry will not be solved overnight; nor would a complete and utter scaling back of credit card rewards be a prudent or beneficial step to take given the key role consumer credit plays in the American economy. Nonetheless, steps must be taken to advance a sense of financial equity in this marketplace and, using a tax with communicative value, the taxation of credit card rewards would signify both a salient path forward and a reversal of years of confusion and scattershot enforcement. Most importantly, by implementing an effective taxing scheme for credit card rewards, the IRS would ensure that it sends a message to taxpayers that, regardless of their socioeconomic status, the concept of income will be treated broadly and enforced appropriately.

TREVOR H. FRY

Footnote

1 See Christopher Elliott, Now Arriving: the Golden Age of Air Travel, NBC NEWS (Jan. 4, 2011), https://www.nbcnews.com/id/wbna40769604 [https://perma.cc/N6BH-LM8G] (discussing various memories of early air travel and comparisons to travel today). Although often looked upon with intense nostalgia, this period was also marked by sexist advertisement campaigns, impossible standards of beauty for flight attendants set by airline companies, and a "[c]atering to men's desires" by the industry. Leslie Bennetts, The Golden Age of Air Travel Gets a Reality Check, N.Y. TIMES (Apr. 30, 2022), https://www.nytimes.com/2022/04/30/books/review/ann-hood-fly-girl-great-stewardess-rebellion. html [https://perma.cc/85BB-FLFY].

2 See Elliot, supra note 1 (offering description of what flying was like during the first half of the twentieth century).

3 See Danielle Nerman, Why the Golden Age of Flying Is Never Coming Back-and It Might Not Be a Bad Thing, CBC NEWS, https://www.cbc.ca/radio/costofliving/golden-age-air-travel-1.6726341 [https://perma.cc/CJ83-P72D] (Jan. 29, 2023) (noting that, adjusted for inflation, a ticket to go between Toronto and Vancouver in 1950 would cost about $1,400 today); see also Natalia Senanayake, Is It 'Socially Acceptable' to Wear Sweatpants on a Plane? Social Media Post Saying No Goes Viral, PEOPLE (July 20, 2024), https://people.com/sweatpants-on-plane-socially-acceptable-debate-garyjanetti- 8679405 [https://perma.cc/B4G7-XT2S] (discussing the current debates as to what clothes make acceptable airplane attire). The debate around what to wear when flying has produced drastic statements, such as people noting that those who wear sweatpants on airplanes "have lost all sense of decency." Senanayake, supra.

4 See Jamie Lauren Keiles, The Man Who Turned Credit-Card Points Into an Empire, N.Y. TIMES, https://www.nytimes.com/2021/01/05/magazine/points-guy-travel-rewards.html [https://perma.cc/VLZ9- LPJH] (June 15, 2023) (discussing the airline deregulation process that scaled back the role of the federal government in policing the industry and undid regulations in place since the 1930s).

5 See Gregory Navasarkian, Economic Regulation of the Commercial Aviation Sector and the 1978 Airline Deregulation Act, LIBR. OF CONG. BLOGS (June 2, 2022), https://blogs.loc.gov/law/2022/ 06/economic-regulation-of-the-commercial-aviation-sector-and-the-1978-airline-deregulation-act/ [https://perma.cc/H232-B6ZD] (providing a survey of the history and eventual phasing out of the regulation of the United States' airline industry).

6 Id. Before deregulation occurred in 1978, the airline industry was largely controlled by the Civil Aeronautics Board (CAB). See JeffNeal, Why Flying Is Miserable, HARV. L. TODAY (Nov. 14, 2023), https://hls.harvard.edu/today/airline-deregulation-may-be-why-flying-is-such-a-miserable-part-ofholidaytravel/ [https://perma.cc/HJ2C-YM3S] (discussing the aftermath of deregulation on the airline industry). The CAB "allocated routes to different airlines to fly between different cities" and its oversight even stretched to controlling the price of fares. Id. This saw steady rates of service to "much of the country," and it meant that the CAB "tried to make sure that there was a measure of competition." Id. One of the goals of the CAB was to provide a "Goldilocks balance" of service throughout the entire country-where airlines had to provide service to more remote locals, but not at a rate high enough for the carriers to become insolvent. Id. Although some have argued that the CAB should have remained in place and for air travel to remain a premium service, it is undoubtedly true that the Airline Deregulation Act of 1978 has contributed to lower fares across the board, more frequent worldwide connectivity, and greater access to air travel for a wider swath of the population. See Clifford Winston & Steven A. Morrison, The Fare Skies: Air Transportation and Middle America, BROOKINGS INST. (Sept. 1, 1997), https://www.brookings.edu/articles/the-fare-skies-air-transportation-and-middle-america/ [https://perma.cc/ZZ2K-QUFY] ("[T]ravelers have benefited not only from low fares, but from better service, particularly increased flight frequency.").

7 See Ben Schlappig, American Airlines Buy On Board Food in Economy: Why So Bad?, ONE MILE AT A TIME (Sept. 4, 2024), https://onemileatatime.com/insights/american-airlines-buy-on-boardeconomy/ [https://perma.cc/8GWW-HCLD] (discussing the prices for in-flight meal options while flying American Airlines); see also Elliot, supra note 1 (describing the luxurious services that used to be provided to all passengers on flights). See generally Derek Thompson, How Airline Ticket Prices Fell 50 Percent in 30 Years (And Why Nobody Noticed), THE ATLANTIC (Feb. 28, 2013), https://www. theatlantic.com/business/archive/2013/02/how-airline-ticket-prices-fell-50-in-30-years-and-why nobody-noticed/273506/ [https://perma.cc/CWR6-RRLQ] (explaining airline deregulation's role in lower ticket prices).

8 The Evolution of the Commercial Flying Experience, NAT'L AIR & SPACE MUSEUM, https://air andspace.si.edu/explore/stories/evolution-commercial-flying-experience [https://perma.cc/6NMN- 9N9Z] (describing the evolution of commercial air travel from a "novelty" to a necessity); see New Technologies, EUR. FED'N FOR TRANSP. & ENV'T (2024), https://www.transportenvironment.org/ challenges/planes/airplane-pollution/ [https://perma.cc/LM7F-5ANA] (noting the effects that the airline industry has on climate change). Although outside the breadth of this Note, it is important to acknowledge that the rise in airline travel over the past century has resulted in the airline industry becoming a "significant contributor to climate change[,]" and emissions from the airline industry "have been growing faster than any other mode of transport, and have more than doubled between 1990 and 2019." Id.

9 See Keiles, supra note 4 (discussing the rise and prevalence of rewards as an economic tool). Rewards programs are "businesses inside businesses[,]" wherein customers see opportunities to spend money at retailers who offer such programs and are, thus, incentivized to build up a bank of points that can be transferred into rewards (e.g., buying multiple muffins at a café so that a single muffin in the future will be free). Id. These programs range from the popular Starbucks Rewards to the less well-known, but certainly frequently used, free sandwich punch card one might carry in one's pocket when getting lunch at a local bodega. See id. (discussing the wide-ranging opportunities to accrue loyalty rewards across the economy). There is also variance in how effective these loyalty programs are in securing repeat visits from customers. See id. (noting that the success of loyalty programs in securing customer devotion varies from business to business). The roots of successful loyalty programs can be traced to "traditional small businesses" who made it their goal to build familiar relationships with customers and offering them the occasional free product or notification about a good deal-creating a favorable dialogue and trust between the retailer and consumer. Louise O'Brien & Charles Jones, Do Rewards Really Create Loyalty?, HARV. BUS. REV. (May-June 1995), https:// hbr.org/1995/05/do-rewards-really-create-loyalty [https://perma.cc/ECL2-2C6N]. There is little dispute that loyalty programs "can and do build customers' loyalty"; rather, the dispute as to their effectiveness often centers around how the business designs and implements said programs-to be effective, programs must be "designed to build loyalty." Id. The rise of these programs has also resulted in a war of advertisements and added preferential services for loyalty members where businesses are constantly attempting to out-entice their competitors for a slice of the bountiful loyalty program pie. See United Orders 110 New Aircraftwith Deliveries Starting in 2028, PR NEWSWIRE (Oct. 3, 2023), https://www.prnewswire.com/news-releases/united-orders-110-new-aircraft-with-deliveries-startingin- 2028-301946233.html [https://perma.cc/7Q45-SNQH] (discussing United Airlines' recent large orders for new aircraft); see also Boarding Process, AM. AIRLINES (2024), https://www.aa.com/ i18n/travel-info/boarding-process.jsp [https://perma.cc/R9VU-KD67] (noting that AAdvantage Members are permitted to board before regular main cabin customers).

10 See Zach Griff, Delta SkyMiles Change Saga: Improvements Made to Medallion Status and Sky Club Lounge Access, THE POINTS GUY (Oct. 18, 2023), https://thepointsguy.com/news/delta-skymileschangesupdate/ [https://perma.cc/RZB7-ZS9N] (discussing the visceral response from customers after Delta Air Lines (Delta) adjusted its loyalty program). This battle reached a new apex over the summer of 2023 when Delta announced major changes to its famed SkyMiles program, including limiting lounge access and raising the number of miles needed to reach the vaunted "Medallion Status," among other adjustments. Id. In response to the proposed changes, Delta found itself facing an "uproar" from customers and the airline "received thousands of letters and complaints"-underlining how near and dear consumers hold these loyalty programs to their hearts. Id. Following Delta's announcement, other airlines (such as JetBlue Airways and Alaska Airlines) swooped in to try and entice away Delta's loyalty customers. See Victoria M. Walker, The Battle Over Rewards Points, N.Y. TIMES, https://www.nytimes.com/2023/10/19/travel/delta-sky-miles-rewards-points.html [https:// perma.cc/X2XG-Y47M] (Oct. 22, 2023) (discussing the aftermath of Delta's SkyMiles changes and the efforts of other airlines to draw customers away from Delta). After hemming and hawing, Delta's CEO, Ed Bastian, announced in September of 2023 that the airline would make changes to its original decisions and lessen the perceived blow to consumers. See id. (providing an overview of Delta's walking back of its original plan to change the SkyMiles program).

11 See Keiles, supra note 4 (describing the basic operation of airline loyalty programs).

12 See id. ("Good programs dangle a deliberate carrot, forging customer loyalty . . . ."). A frequently mentioned proverbial phrase in this sector of business is that "[p]eople are willing to pay anything for a free ticket." Id. Loyalty programs give customers the feeling of "perceived thrift"- convincing them that they are getting the absolute best deal or getting something for free-while ensuring that customers continue to spend money with the business offering the program. Id. In economic theory, the underlying goal of these programs is to heighten the real or perceived switching costs from changing from one brand's product to another's. Mitchell Grant, Switching Costs: Definition, Types, and Common Examples, INVESTOPEDIA, https://www.investopedia.com/terms/s/switchingcosts. asp#:~:text=What%20Are%20Switching%20Costs%3F,and%20time%2Dbased%20switching%20 costs [https://perma.cc/X4B9-M666] (Aug. 1, 2024). Although switching costs can undoubtedly be "monetary in nature" (e.g., the cost of changing your business's equipment such that in can work in tandem with a new supplier's product), they may also be "psychological" in nature. Id. Despite the fact that the literature on the ultimate "effect of loyalty programs on emotional commitment is inconclusive[,]" some have posited they can engender a "strong group identity" and can make customers "feel preferred and special." Seyhmus Baloglu, Yun Yin (Susan) Zhong & Sarah Tanford, Casino Loyalty: The Influence of Loyalty Program Switching Costs, and Trust, 41 J. HOSP. & TOURISM RSCH. 846, 851 (2017). There is research, however, that suggests that the "impact of loyalty programs on emotional commitment" is linked to the type of rewards offered by the business. Id. Additionally, data suggest that "social rewards[,]" or those benefits that "lead to perceptions of special treatment and personalized attention" are more effective in engendering emotional commitment that translates into "stronger, more binding relationships" between a consumer and a business than simply pecuniary rewards. Joanna Philips Melancon, Stephanie M. Noble & Charles H. Noble, Managing Rewards to Enhance Relational Worth, 39 J. ACAD. MKTG. SCI. 341, 343 (2011). Research suggests that the most effective manner of increasing this emotional commitment is to have customers perceive as though they are receiving specialized treatment, that then reinforces the "pleasure or satisfaction innate in coming to the organization." Id. If successful, these programs can also build a sense of "trust and commitment with an organization"-creating repeat customers who will remain loyal to a specific brand. Id.

13 See Keiles, supra note 4 (noting the prevalence of airline rewards programs).

14 Eric Rosen, 40 Years of Miles: The History of Frequent Flyer Programs, THE POINTS GUY (May 20, 2021), https://thepointsguy.com/guide/evolution-frequent-flyer-programs/ [https://perma.cc/ Y2G4-P5YV].

15 See id. (describing the first-of-its-kind international mileage cooperation agreement between American Airlines and British Airways in 1982). These partnerships expanded quickly throughout the latter part of the twentieth century and evolved into the huge airline alliances of today. See id. (detailing the rapid expanse of global airline alliances); see also Hoang Truong Giang & Tran Thi Kim Anh, The Economic Effects of Airline Alliances and Mergers in the Airline Industry, 83 EXTERNAL ECON. REV. 67, 67-70 (2016) (providing a history of the creation of airline alliances across the globe). These alliances now occupy commanding positions in the global airline industry; evidenced by the fact that in 2011 member airlines of the alliances "carried 68% of international scheduled Revenue Passenger Kilometres." Giang & Anh, supra, at 68. There are three major airline alliances that combine the vast majority of major international carriers across the globe. Lissa Poirot, Airline Alliances: How They Work, Which Airlines Are in Which Alliance, NERDWALLET, https://www.nerdwallet.com/article/ travel/your-guide-to-airline-alliances [https://perma.cc/ANA3-Q9B3] (Feb. 2, 2024). The main alliances are: Star Alliance (notably comprising United Airlines, Air Canada, and Turkish Airlines); SkyTeam (notably comprising Delta, Air France, and Virgin Atlantic); and Oneworld (notably comprising American Airlines, British Airways, and Qatar Airways). Id. Each respective alliance does not offer their own group-wide loyalty program, instead each network primarily offers the benefit of seamless connections when flying on multiple stop journeys, taking advantage of member airlines' route networks to ensure uninterrupted itineraries and travel. Id.

16 See Rosen, supra note 14 (discussing the introduction of the first co-branded credit card). The first co-branded credit card that allowed customers to gain airline miles on purchases was the Continental TravelBank Gold Mastercard, a partnership between Continental Airlines and Marine Midland Bank. Id. This card was quickly followed by other partnerships between airlines, card issuers, and banks. Id.

17 See id. (comparing early airline credit cards points systems with the complexities of today's interconnected webs).

18 See id. (discussing the rise of credit card issuers and their own system of proprietary points).

19 See Nick Ewen, How to Transfer Credit Card Rewards to Partner Programs, THE POINTS GUY (Feb. 12, 2024), https://thepointsguy.com/credit-cards/transfer-credit-card-rewards/ [https://perma.cc/XJX3-V6P2] (offering an overview of the plethora of ways credit card holders can transfer points to partner programs). These points can be transferred to pay for hotel rooms, flights, or can simply be used to pay cash as a statement credit to the card-using consumer. Becky Pokora, Chase Ultimate Rewards: The Ultimate Guide, FORBES, https://www.forbes.com/advisor/credit-cards/chase-ultimaterewardsguide/ [https://perma.cc/PP82-VGTH] (July 9, 2024). Today, airlines profit heavily from these "highly lucrative" programs, with some commentators going so far to say that airlines are simply now banks masquerading as common carriers. Ganesh Sitaraman, Airlines Are Just Banks Now, THE ATLANTIC (Sept. 21, 2023), https://www.theatlantic.com/ideas/archive/2023/09/airlines-banksmileageprograms/675374/ [https://perma.cc/K5ZN-2SQG]. As an example of how pervasive these co-brands can be in the current economy, as of June 2023, Delta's CEO Ed Bastian noted that approximately one percent of U.S. gross domestic product is charged to the co-branded cards offered by Delta and American Express (Amex). Sean Cudahy, How Much do we Charge to our Delta Air- American Express Cards? (It's a Lot.), FAST CO. (Aug. 9, 2023), https://www.fastcompany.com/ 90934980/how-much-do-we-charge-to-our-delta-air-american-express-cards-its-a-lot [https://perma. cc/9BEG-JQNV]. As put by the Delta CEO himself: "These are, like, crazy big numbers when you think about it." Id. Airlines now operate as pseudo-banks, printing currency in the form of miles and "[selling] them for real money to banks" as part of the deals for co-branded credit cards. Sitaraman, supra. The credit card issuers then dispense these purchased miles to customers and make their share of profits offof the subsequently incurred interest and interchange fees that customers accrue as they use their cards for daily purchases. Id. This new marketplace of currency is a financial boost for airlinesthey incur no expense for creating these miles out of thin air and can entice consumers with the elusive idea of an occasional free flight or free hotel room (after spending, potentially, thousands of dollars using their card). Id. Because of the airline industry's unfettered ability to create miles out of thin air (in a similar manner to the U.S. Federal Reserve, albeit with less oversight), the system is "opaque and, often, unfair." Id. The evolution of airlines into "quasi-banks" is suggestive of the negative repercussions of airline deregulation in that the industry can now snake its tendrils into multiple facets of the economy-creating currency and regulating online markets with close to no oversight. Id. The average consumer has still yet to reap the full benefits of the deregulation of the 1970s and 1980s. See id. (discussing the effects of the "consolidation and cost-cutting" that came in the wake of deregulation).

20 See Sitaraman, supra note 19 (describing the complicated and everchanging nature of points systems). Although the earliest loyalty programs, such as that pioneered by Southwest Airlines, were extremely simple in format (i.e., a traveler could earn a completely free flight after a set number of paid flights), the programs of today are highly technical, subject to vast discrepancies in how many "miles" it takes to purchase a flight and are linked more closely to "money spent rather than [actual] mileage accrued." Id. The term "miles" may no longer be the best word to describe the accrued currency of these loyalty programs, as a flight from Boston, MA to Chicago, IL (at a distance of roughly 850 miles by air), can cost from 10,000 to 50,000 "miles" depending on time of year, date, time-ofday, demand, airline, etc. See id. (noting the arbitrary manner that mileage valuations are set).

21 See Keiles, supra note 4 (using the example of the rise of The Points Guy (TPG) to explain the emergence of a subculture of points devotees); see also Jeffrey Brownson & Becky Pokora, The Real Challenge with Valuing Miles and Points, FORBES, https://www.forbes.com/advisor/credit-cards/ travel-rewards/the-real-challenge-with-valuing-miles-and-points/ [https://perma.cc/PHA7-FTWZ] (May 1, 2023) (noting the complex valuation issues present in credit card rewards and airline miles).

22 See generally Pokora, supra note 19 (offering a description of the benefits offered by a Chase Sapphire credit card); see also Michael McHugh, The 16 "Best of the Best" Ways to Use Your Points & Miles [for Incredible Value], UPGRADED POINTS, https://upgradedpoints.com/travel/best-of-thebestways-to-use-your-points-miles/ [https://perma.cc/9GZU-4D74] (July 10, 2024) (describing the best ways to use travel partners of credit cards to secure luxury travel); see also infra note 23 and accompanying text (listing examples of particularly well-known social media travel influencers). Hidden within many of these online guides is a quick disclaimer that notes that these websites are partners with credit card companies, and many websites, including the behemoth TPG, "receive compensation" when someone clicks on a link. THE POINTS GUY, https://thepointsguy.com/ [https:// perma.cc/83PM-DAEN]. These partnerships are one of the TPG's main sources of revenue. Keiles, supra note 4.

23 Max-Miles and Points Educator/Traveler (@maxmilespoints), INSTAGRAM, https://www. instagram.com/maxmilespoints/ [https://perma.cc/7FRX-U8P5]; Michelle González (@laxtoluxury), INSTAGRAM, https://www.instagram.com/laxtoluxury/ [https://perma.cc/3NWL-DCLR]; The Points Guy, (@thepointsguy), INSTAGRAM, https://www.instagram.com/thepointsguy/ [https://perma.cc/ ZH62-DW7A]; Jeb Brooks (@jebbrooks), INSTAGRAM, https://www.instagram.com/jebbrooks/ [https:// perma.cc/UYL5-GMKV].

24 See generally Emily Thompson, Chase Freedom Cardholders: Here Are 3 Ways to Maximize the Rotating Categories This Quarter, THE POINTS GUY (Jan. 2, 2024), https://thepointsguy.com/ news/maximize-chase-freedom-grocery-gym-salon-spa/ [https://perma.cc/TM9M-ANG2] (discussing how best to use a specific credit card's points offerings in the first quarter of 2024); see also Elina Geller & Sam Kemmis, A Beginner's Guide to Traveling on Points and Miles, NERDWALLET, https://www.nerdwallet.com/article/travel/nerdwallets-beginners-guide-to-credit-cards-points-miles [https://perma.cc/TXE5-QCKH] (Oct. 21, 2024) (providing a broad introductory overview on how to maximize credit card rewards); see also Max Miles Points, How to EASILY Book Emirates with Credit Card Points, YOUTUBE (May 30, 2023), https://www.youtube.com/watch?v=ZxKTR60oY60 [https:// perma.cc/Z6V3-VC2K] (discussing how to maximize credit card points to redeem luxury travel). There are countless, well-known, frequently quoted advertisements for credit cards that constantly command the airwaves-all that seek to entice one to sign up for the latest and greatest credit card offering. Mastercard, Getting Closer Together . . . Priceless, YOUTUBE (June 17, 2021), https://www. youtube.com/watch?v=y4ZrgY2XYuM [https://perma.cc/G5B2-7Q75]; American Express, Member When | Brunch, YOUTUBE (Sept. 16, 2022), https://www.youtube.com/watch?v=0UyK5ie7Jzk [https:// perma.cc/LT3J-WA8M]; Chase, Reward Yourself with the Chase Mobile® App, YOUTUBE (Oct. 26, 2021), https://www.youtube.com/watch?v=yabAXn_tn5M [https://perma.cc/3E87-UV44]. Credit card companies have also started to pivot from sending hardcopy advertisements to mailboxes, to inundating social media feeds with their pitches. AnnaMaria Andriotis, Credit Card Issuers Boost Spending on Social-Media Ads, WALL ST. J. (Apr. 23, 2019), https://www.wsj.com/articles/credit-card-issuersboostspending-on-social-media-ads-11556011801 [https://perma.cc/7J27-QML7]. In 2018, Capital One and Amex spent $18.6 million and $13.5 million, respectively, on Facebook advertisements alone. Id. Capital One has taken this media blitz even further and "has been paying Instagram and Twitter users with 100,000 to 1 million followers to post photos, mostly of restaurant settings, alongside the bank's Savor rewards credit card." Id. This change in advertising tactics suggests how credit card companies are beginning to shifttheir consumer base toward younger individuals "with the lure of points and other perks." Id.

25 See Chenzi Xu & Jeffrey Rappuci, Opinion, The Dirty Little Secret of Credit Card Rewards Programs, N.Y. TIMES (Mar. 4, 2023), https://www.nytimes.com/2023/03/04/opinion/credit-cardrewardspoints-poor-interchange-fees.html [https://perma.cc/8T34-N3K3] (discussing how "affluent professionals" can access exclusive rewards by having poorer individuals, effectively, foot the bill). There is a strong correlation between "[h]ow you pay [at the register] and how much you make." Aaron Klein, Opinion, How Credit Card Companies Reward the Rich and Punish the Rest of us, L.A. TIMES (Dec. 20, 2019), https://www.latimes.com/opinion/story/2019-12-20/opinion-how-credit-cardcompaniesreward-the-rich-and-punish-the-rest-of-us [https://perma.cc/JHC5-8TRU]. Credit card processing fees are built into the prices every consumer pays; however, only people with higher credit scores-typically those with higher incomes-can access credit cards with significant rewards. Id.; see Keiles, supra note 4 (discussing how credit card fees are baked into the costs of most goods). This means people with poor credit, who must use cash or basic cards, are effectively helping fund the perks enjoyed by wealthier cardholders. See Klein, supra (noting the inequities in the credit card market). An apt example is as follows: a family that pays $250,000 on products throughout a year using a card with a 2.5% cashback offer will accrue $6,250 in rewards over the year, but a family that uses cash or debit cards for payment will "get nothing in return for their spending." See id. (offering the aforementioned illustration). In our current format, "inequality is exacerbated every time you buy." Id. Recent research suggests that, thanks to this system, high-income households receive $430 in rewards from low-income households each year. Scott Schuh, Oz Shy & Joanna Stavins, Who Gains and Who Loses from Credit Card Payments? Theory and Calibrations 10-3 (Fed. Rsrv. Bank of Bos., Pub. Pol'y Paper No. 10-03, 2010). This disparity becomes even more stark when dividing households into more detailed income groups: for example, households earning less than $20,000 annually subsidize the "highest income household[s] ($150,000 or more annually)" to the tune of $750 a year in rewards. Id.

26 See Keiles, supra note 4 ("The poor underwrite the fantasies of the middle class, who in turn underwrite the realities of the rich."). As the prevalence of credit cards and other digital forms of payment have risen, merchants must increasingly bake the cost of interchange fees into the products they sell-meaning that if someone uses cash (or a debit card) to pay for an item they are, by proxy, subsidizing the rewards given out by the card issuer or bank. Id. In 2010, a policy paper from the Federal Reserve Bank of Boston noted that "cash-using households paid $149 over the course of a year to card-using households[,]" while those card-using households "received $1,133 from cash users, partially in the form of rewards." Id. Data suggest that card use rises as income rises, meaning that those in higher income brackets can then reap the rewards funded by interchange fees while those who use credit cards less frequently, or not at all, are effectively funding these rewards programs. See James Lardner, Whom Do Credit-Card-Rewards Programs Really Reward?, NEW YORKER (Dec. 15, 2022), https://www.newyorker.com/news/daily-comment/whom-do-credit-card-\rewards-programsreallyreward [https://perma.cc/3NAN-4KLP] (describing the research into credit card usage). With this documented upward wealth transfer being an inherent part of the credit card marketplace, the industry has undoubtedly become an "agent of rising inequality in the business world as well as in the human world." Id. Aggressive promotion and advertisements preaching the gospel of rewards benefits has led more and more people to use credit cards, which only exacerbates the risk of falling into debt and takes a "bigger and bigger bite out of the earnings of retailers." Id.

27 See Susie Allen, Who Pays for All Those Generous Credit Card Rewards?, KELLOGGINSIGHT (Jan. 1, 2024), https://insight.kellogg.northwestern.edu/article/who-pays-generous-credit-card-rewards [https://perma.cc/8UZG-Q2AD] (noting that interchange fee profits are funded by interchange fees); see also Krista Fabregas & Cassie Bottorff, What Is An Interchange Fee? Here's Why They Are Required, FORBES, https://www.forbes.com/advisor/business/interchange-fees/ [https://perma.cc/CBK8- DLCC] (June 3, 2024) (discussing the myriad ways in which interchange fees can change and vary). The interchange fee itself is a "percentage of the total charge in a credit or debit card transaction." Id. These rates can also change based on which card is being used (debit vs. credit) or where a card is being used, as online transactions have a higher interchange fee to account for the increased fraud risks inherent in online transactions. Id. Credit card companies earn huge amounts of revenue from interchange fees and, in 2004, card issuers "earned approximately $25 billion in revenue from interchange fees"-underlining the incredibly lucrative nature of these fees. James M. Lyon, The Interchange Fee Debate: Issues and Economics, FED. RSRV. BANK OF MINNEAPOLIS (June 1, 2006), https://www.minneapolisfed.org/article/2006/the-interchange-fee-debate-issues-and-economics [https://perma.cc/GP4E-B6SU]. For larger banks, the charging and collecting of interchange fees represents a significant portion of their revenue. See Zoe Sagalow & Syed Muhammad Ghaznavi, Fed's Interchange Fee Proposal Threatens US Banks' Fee Income, S&P GLOB. MKT. INTEL. (Nov. 7, 2023), https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/fed-sinterchangeproposal-threatens-us-banks-fee-income-78255716 [https://perma.cc/F7VL-F9ZC] (describing the size and breadth of the interchange fee business). For example, in the second quarter of 2023, interchange fees made up 59.3% of Amex's operating revenue and 13.5% of Capital One's operating revenue. Id. Although some banks "depend on that fee income more than others[,]" any threat to changing interchange fees is likely to be met with worry from executives at all card-issuing banks/companies. See id. (discussing the reaction by bank executives to proposals seeking to further limit debit card interchange fee rates).

28 See generally Oz Shy, Should Credit Card Rewards Be Taxed?, 26 J. PUB. ECON. THEORY e12660 (2023) (describing different interchange fees). Interchange fees can change drastically between types of stores, with fees at brick-and-mortar locations ranging from 1.5% to 2.1% for premium cards and at grocery stores from 1.3% to 1.7%. Id. These fees are in stark contrast to the cap that countries in the European Union have placed on credit card interchange fees ("0.3% of the payment value in all merchant categories"). Id.

29 See Lyon, supra note 27 (discussing the costs that smaller businesses must bear to process necessary credit card transactions).

30 See Lardner, supra note 26 (discussing the impetus behind the proposed Credit Card Competition Act (CCCA)).

31 Credit Card Competition Act of 2023, S. 1838, 118th Cong. (2023); see Lardner, supra note 26 (discussing the primary goals and sponsors of the CCCA).

32 See Lardner, supra note 26 (noting that the largest banks in the United States were able to block the original attempt at passage of the CCCA); see also Press Release, Dick Durbin, U.S. Senator, Short Summary of the Credit Card Competition Act of 2023 (2023), https://www.durbin.senate. gov/imo/media/doc/The%20Credit%20Card%20Competition%20Act%20of%202023%20-%20onepager. pdf [https://perma.cc/T5NB-JCV7] (listing the supporters of the proposed bill). The new attempt to pass the CCCA has again drawn the ire of credit card industry lobbying groups, and they have spent millions of dollars in an effort to prevent its passage. ICYMI: Support for Durbin-Marshall Credit Card Competition Act Continues to Grow Despite Coordinated Smear Campaign by Credit Card and Airline Companies, Wall Street Banks, U.S. SENATE COMM. ON THE JUDICIARY (May 10, 2024), https://www.judiciary.senate.gov/press/releases/icymi-support-for-durbin-marshall-credit-cardcompetitionact-continues-to-grow-despite-coordinated-smear-campaign-by-credit-card-and-airlinecompanieswall-street-banks [https://perma.cc/DK5J-7A2W] [hereinafter ICYMI].

33 See Lardner, supra note 26 (explaining the basic characteristics of the CCCA).

34 Id. The major proponents of this bill posit that, in a perfect world, it would lead to "lower prices and diminished inflation." Id. Critics of the bill have focused on the argument that, if passed, the CCCA has the potential to completely change credit cards as society understands them today. See Caroline Tanner & Nick Ewen, Explaining the Credit Card Competition Act and What It Means for Your Credit Card Rewards, THE POINTS GUY (Dec. 4, 2023), https://thepointsguy.com/news/creditcardcompetition-act/ [https://perma.cc/BPB3-K3HE] (noting that the bill, allegedly, has "the potential to significantly negatively alter, if not completely eliminate, the world of credit card rewards"). In opposition to this contention, data suggest that the CCCA would have a "negligible impact-at most-on rewards if enacted." ICYMI, supra note 32. At the same time, the bill's proponents contend that the obliteration of credit card rewards would be an objectively beneficial thing for the economy and would help tamper credit cards' roles as "instruments of upward income redistribution." Lardner, supra note 26. Furthermore, with fewer lucrative rewards, smaller businesses would potentially see a rise in the use of other non-card based transactions-such as increased rates of customers using cash, Venmo, and PayPal-enabling them to slowly take the cost of interchange fees out of their pricing schemes. See id. (discussing some beneficial repercussions to the potential passage of the CCCA).

35 See generally Press Release, What Is the Credit Card Competition Act?, CHASE (2024), https:// www.chase.com/personal/credit-cards/education/rewards-benefits/what-is-the-credit-card-competitionact [https://perma.cc/TSP6-ZXVT]. Although not an outright critique of the CCCA, the wording from Chase's discussion of the act plants seeds of discomfort with the consumer in noting that these new payment networks may be "less mature" and that policymakers feel that the legislation will result in lower prices for consumers. Id. Important players in the credit card rewards media industry have also raised concerns, and articles from outlets, such as TPG, have raised extreme alarm bells to their readers and the articles have focused mainly on painting a picture the consumer being harmed at the expense of benefitting the retailer. See Tanner & Ewen, supra note 34 (detailing TPG's argument against the CCCA's passage). More informal credit card rewards devotees and influencers present on social media networks have also expressed their displeasure with the CCCA's potential passage, as without the prevalence of these rewards, they would no longer be able to continually cultivate their own revenue streams. See Ben Hedges, US Senate Trying to DESTROY Credit Card Rewards (Credit Card Competition Act), YOUTUBE (July 13, 2023), https://www.youtube.com/watch?v=xZLhNyKQ 948 [https://perma.cc/NGS8-XC68] (discussing the repercussions of the CCCA); see also adventure_parks (@adventure_parks), INSTAGRAM, https://www.instagram.com/adventure_parks/reel/CvILpVVgzHk/ [https://perma.cc/Z2M9-L52Z] (warning of the repercussions that could follow the CCCA's passage).

36 See Kara Reinhardt, Airline CEOs: Rewards Under Threat, LINKEDIN NEWS, https://www. linkedin.com/news/story/airline-ceos-rewards-under-threat-6476970/ [https://perma.cc/M5ZZ-5S4S] (Nov. 2023) (summarizing responses to the CCCA from major airline CEOs and industry commentators). Although opposition has been vocal, the dire warnings of a total loss of credit card rewards may be unwarranted given the repercussions of similar legislation in the European Union, Australia, and the United Kingdom. See Lardner, supra note 26 (noting that rewards programs still exist in jurisdictions that have implemented interchange fee regulations). For example, the European Union's regulations do not allow for interchange fees to rise above 0.3% of the value of a credit card transaction. Antitrust: Regulation on Interchange Fees, EUROPÄISCHE KOMMISSION (June 9, 2016), https://ec. europa.eu/commission/presscorner/detail/de/MEMO_16_2162 [https://perma.cc/W7VQ-M8R3]. This in turn limits the amount of profits card companies can derive from these transactions and has resulted in less lucrative rewards schemes in Europe. See Cole Schenewerk, U.S. vs. U.K. Credit Cards: An Expat's Guide, FORBES, https://www.forbes.com/advisor/credit-cards/us-vs-uk-credit-cards/ [https:// perma.cc/7SUC-3MPB] (Sept. 10, 2024) (discussing the differences in awards between European and American credit cards). Although still limited in terms of their rewards offerings when compared to their cousins across the pond, Amex cards in the United Kingdom (U.K.) are able to exploit a small loophole in the country's law (due to the company "operat[ing] its own payment network[,]" and their cards have become the "undisputed king of the rewards space in the U.K." Id.

37 See Jack Caporal, Study: Americans Value Credit Card Rewards Over Trust, THE ASCENT, https://www.fool.com/the-ascent/research/how-gen-z-millennials-gen-x-baby-boomers-use-creditcards/ [https://perma.cc/WTZ8-U66U] (Sept. 11, 2024) (noting that Americans place an outsized level of importance on credit card rewards). Sixty-four percent of Americans say that credit card features like interest rates and rewards are more important than trust in the credit card issuer. Id. Some have hypothesized that, because rewards programs are such key incentives for consumers to sign up for cards, credit card issuers could seek alternative routes to continue to fund these programs: such as increasing "ATM fees, overdraftfees, foreign transaction fees, over-limit fees, annual fees, etc." Evan Zimmer, Credit Card Competition Act Won't End Rewards Programs, Says One Financial Expert. Here's Why, CNET, https://www.cnet.com/personal-finance/credit-cards/advice/how-the-credit-cardcompetitionact-will-impact-consumers-and-businesses/ [https://perma.cc/TV2G-Z3CD] (Aug. 2, 2023) (providing an alternative view on how credit card issuers could retain the current rewards schemes). If banks and credit card issuers feel that it is necessary to maintain the same level of rewards provisions and overdraftfees are raised, the CCCA could have the effect of pushing more people out of the traditional banking sphere and create setbacks primarily for lower-income consumers. See Joe Valenti, OverdraftFees Can Price People Out of Banking, CFPB (Mar. 30, 2022), https:// www.consumerfinance.gov/about-us/blog/overdraft-fees-can-price-people-out-of-banking/ [https:// perma.cc/V3ZP-P5BQ] (discussing the repercussions of rising overdraftfees). If overdraftfees rise to excessive levels, "people living paycheck to paycheck" may have no other option other than to close their accounts-making "everyday transactions riskier and more difficult." Id.

38 See Lardner, supra note 26 (noting that credit cards are an "agent of rising inequality"). The credit card rewards industry creates "an estimated annual redistribution of more than $15 billion" from lower income to upper-income individuals. Emily Lorsch, Are Lower-Income Americans Paying for Consumers' Credit Card Rewards? Some Economists Say They Are, CNBC, https://www.cnbc.com/ 2023/05/27/lower-income-americans-pay-for-wealthys-credit-card-rewards-some-economists-say. html#:~:text=Agarwal%20and%20other%20economists%2C%20in,minority%20areas%20%E2% 80%94%20widening%20existing%20disparities [https://perma.cc/ZC4Z-KXAL] (May 30, 2023). The credit card industry also has a documented history of discrimination against minorities in accessing cards and its private, unregulated "algorithms and data mining" used to calculate risk and approval rates are a major source of this inequity. Andrea Freeman, Racism in the Credit Card Industry, 95 N.C. L. REV. 1071, 1074 (2017).

39 See Joe Light, Visa and Mastercard Are Under Attack. They Will Do Just Fine, BARRON'S (Aug. 16, 2023), https://www.barrons.com/articles/visa-mastercard-are-under-attack-they-will-do-justfine- 7d2e67ce [https://perma.cc/9LCB-9UE5] (discussing the immense profit margins of Visa and Mastercard). In the second quarter of 2023, Visa and Mastercard posted profit margins of 52% and 44%, respectively. Id. Arguably more worrying is the rising wealth gap occurring in America wherein upper-income households have seen a much greater increase in income when compared to those of middle or lower-incomes. Juliana Menasce Horowitz, Ruth Igielnik & Rakesh Kochhar, Trends in Income and Wealth Inequality, PEW RSCH. CTR. (Jan. 9, 2020), https://www.pewresearch.org/socialtrends/ 2020/01/09/trends-in-income-and-wealth-inequality/ [https://perma.cc/D9UF-Z2X5].

40 See Press Release, Household Debt Increased Moderately in Q2 2024; Auto and Credit Card Delinquency Rates Remain Elevated, FED. RSRV. BANK OF NEW YORK (Aug. 6, 2024), https://www. newyorkfed.org/newsevents/news/research/2024/20240806 [https://perma.cc/99R3-UWMP] (noting that household debt increased by $109 billion the second quarter of 2024). Of particular worry is the fact that over the past years, credit card balances have continued to rise, and delinquency rates for credit card users remain elevated. Id.

41 See Lardner, supra note 26 (describing the potential positive repercussions of the CCCA). If the CCCA were to pass it would "bring price competition" to the interchange fee marketplace and would, hopefully, lower rates born by retailers who could then, in turn, bring down prices for consumers. Id.

42 See Clint Wallace, A Democratic Perspective on Tax Law, 98 WASH. L. REV. 947, 978 (2023) (discussing the benefits that can flow from a tax that is "competently formulated and administered"). Today's world, with the rising threats of authoritarianism, political division, and climate change demands the imposition of "tax policies . . . [that are] conceived with a broad focus on establishing and sustaining effective democracy." Id. at 1006.

43 This Note readily recognizes the plethora of different types of rewards (e.g., cashback, miles, multipurpose points, etc.) offered by credit cards issuers, by airlines, and by other companies. Nevertheless, it is the purpose of this Note to offer a general argument for the taxation of specifically those multipurpose points offered by credit card companies or businesses, such as airlines, that can then be used for a plethora of different uses-as opposed to points that are solely redeemed as cashback on a month-end statement.

44 See Wallace, supra note 42, at 978. ("Effective taxation should be approached as fundamental to a healthy democracy.").

45 See infra notes 48-124 and accompanying text.

46 See infra notes 125-166 and accompanying text.

47 See infra notes 167-240 and accompanying text.

48 See Lardner, supra note 26 (discussing the prior "backroom" dealings between banks and credit card companies to prevent change to the system); see also Xu & Reppucci, supra note 25 (discussing the robust credit card rewards industry). In 2021, Visa and Mastercard alone reported $77 billion in credit card interchange fees. Xu & Reppucci, supra note 25.

49 See Freeman, supra note 38, at 1077 (remarking that credit cards have "evolved into an essential tool for lowerand middle-class families to maintain financial stability"). Without credit cards and the access to the capital that they provide, many families would be unable "to meet [their] basic needs." Id. Credit cards have become a tool for simply surviving and putting food on the table. Id.

50 See Susanne Soederberg, The US Debtfare State and the Credit Card Industry: Forging Spaces of Dispossession, 45 ANTIPODE 493, 493-94 (2013) (discussing how the credit card industry and the use of credit cards have become deeply ingrained in neoliberal society). As American society has seen a lack of meaningful advances of a more progressive welfare state, credit cards have come to occupy a unique role in the marketplace. See id. at 494 (noting that credit cards now function as a precarious financial "safety net"). In place of "adequate welfare services," debt instruments, such as credit cards, have become the filler of the "void" created by neoliberal capitalism. Id. With the tacit condoning of predatory practices, the American government, along with other neoliberal democracies, has created a "debtfare state" that "protects banks through the ongoing deregulation of finance and legal policies." Id. at 495.

51 See infra notes 54-85 and accompanying text.

52 See infra notes 86-99 and accompanying text.

53 See infra notes 100-124 and accompanying text.

54 The Investopedia Team, Credit: What It Is and How It Works, INVESTOPEDIA, https://www. investopedia.com/terms/c/credit.asp [https://perma.cc/NGH7-46Z9] (Oct. 1, 2024).

55 See Martin Neil Baily & Douglas J. Elliot, The Role of Finance in the Economy: Implications for Structural Reform of the Financial Sector, BROOKINGS INST. (July 11, 2013), https://www. brookings.edu/articles/the-role-of-finance-in-the-economy-implications-for-structural-reform-of-thefinancialsector/ [https://perma.cc/UG4C-NKX9] (discussing the key role credit plays in the growth of economies).

56 Id. The simple idea of buying on credit can be traced back to time immemorial, with instances of ancient Mesopotamians using clay tablets to form agreements to pay for goods at a later date. Robin Saks Frankel, When Were Credit Cards Invented: The History of Credit Cards, FORBES, https:// www.forbes.com/advisor/credit-cards/history-of-credit-cards/ [https://perma.cc/GXN4-H2DW] (Oct. 9, 2024). There is significant scholarly research suggesting the "significant role" that credit transactions played in the "economies of southern Mesopotamia." Steven J. Garfinkle, Shepherds, Merchants, and Credit: Some Observations on Lending Practices in UR III Mesopotamia, 41 J. ECON. & SOC. HIST. ORIENT 1, 2 (2004).

57 See CLAIRE PRIEST, CREDIT NATION: PROPERTY LAWS AND INSTITUTIONS IN EARLY AMERICA 1-2 (2021) (describing the early roots of the American credit economy). The history of access to credit is deeply intertwined with the structure of the British conception of property, wherein landownership included not only the right to exclude, the right to transfer property, and the right to security on one's land but also the right to "large income streams" of credit available to those at the top of the income pyramid. Id. at 4. For years in England, access to reliable credit was available only to the wealthiest landowners. Id. Access to property in all its forms and trappings is deeply intertwined with the American psyche as evidenced by Alexander Hamilton proclaiming at the Constitutional Convention that "the security of Property" was one of the key goals of the newly formed republic. Id. at 2.Crucial to the formation of America was the creation of a landed class who would participate in the direction of government and democratize what had once been the province of the gentry. See id. at 3 ("As Noah Webster stated in 1787 . . . '[a]n equality of property, with a necessity of alienation, constantly operating to destroy combinations of powerful families, is the very soul of a republic.'"). The rapid growth of the country, the relative ease of its land conveyance system, and its utter vastness of purchasable property all contributed and supported the early systems of access to credit, permitting more people access to lines of credit that had previously been closed. See id. at 5 (discussing the United States' unique relation to credit and land ownership).

58 See Stephen Wilks, Private Interests, Public Law, and Reconfigured Inequality in Modern Payment Card Networks, 123 DICK. L. REV. 307, 344-48 (2019) (providing an overview of race and lending in America). See generally Freeman, supra note 38, at 1073-77 (providing anecdotal evidence of the racism inherent in the credit card marketplace). Slaves were commonly used as collateral in commercial transactions and banks continued to attempt to enforce loans secured in this manner even after the Emancipation Proclamation. Wilks, supra, at 345. Moving into the twentieth century, Black people were systematically denied access to the sources of credit available to white communities and the subversive effects of white supremacy have bled into other economic theories that have continually disadvantaged people of color-the story of credit in America cannot be told and understood without acknowledging these egregious wrongs. Id. at 346-48. Black farmers were denied "equal access" to loan programs from the Department of Agriculture and Black servicemen returning from World War II were denied the same access to financial assistance from institutions to attend college and school in the same numbers as their white counterparts. Id. at 346. Prevailing economic theories of the twentieth century worked to "provide cover for maintaining racialized wealth gaps." Id. at 348. As the twentieth century progressed, Black people were systematically denied access to the sources of credit available to white communities and the subversive effects of white supremacy have bled into other economic theories that have continually disadvantaged people of color-the story of credit in America cannot be told and understood without acknowledging these egregious wrongs. Id. at 346-48.

59 See Christopher L. Peterson, Truth, Understanding, and High-Cost Consumer Credit: The Historical Context of the Truth in Lending Act, 55 FLA. L. REV. 807, 810-12 (2003) (discussing the history of the use of credit in the United States).

60 See Rowena Olegario, The History of Credit in America, AMERICAN HISTORY (May 23, 2019), https://oxfordre.com/americanhistory/display/10.1093/acrefore/9780199329175.001.0001/acrefore- 9780199329175-e-625 [https://perma.cc/5SRP-QWV3] (offering a broad overview of the history of credit from the colonial era to the modern day). The earliest forms of personal credit were in the form of tabs kept for individuals by local shopkeepers who would extend credit in an informal manner to fund purchases. Id. During the period of westward expansion in the nineteenth century, "trade credit[,]" or credit extended between smaller economic players (e.g., between a farm and their local seed store), was the primary engine of economic growth. Id. Slowly but surely, throughout the twentieth century, American consumers gradually became more familiar with accessible types of credit, such as: pawnbroking, installment plans, and credit unions. Id.

61 See Peterson, supra note 59, at 845 (discussing the social taint attached to using credit for "personal consumption purposes" in early American history). Society viewed borrowers who sought credit to buy for "personal transactions" as not to be trusted, and "low interest rate caps" set by the government made it almost impossible for lenders to make profits on small-scale loans to individualsadding an economic reason to the lack of credit for personal consumption. Id. at 846.

62 See Olegario, supra note 60 (discussing the rise of personal loans and purchasing cars via installment plans). These early forays into personal credit were oftentimes funded by "special financial subsidiaries" set-up by automakers and only after the Great Depression did larger-scale commercial banks jump onto the consumer lending bandwagon. See id. (discussing the changing habits of consumer lending).

63 Id. The rise of the use of installment plan purchasing facilitated Americans' general comfort with purchasing something on credit to be paid later-in effect, it laid the groundwork for an increased expectation that to be part of the society, one must have the latest appliances and equipment. See Lydia Saad, Americans Living Beyond Their Means, GALLUP (Dec. 15, 2016), https://news. gallup.com/vault/199631/thursday-midday-vault.aspx [https://perma.cc/665N-9VN6] (noting that by 1941, "about 70% of Americans had used installment plans at some point"). The prevalence of this payments system allowed Americans to first access items that had previously been "out of their financial reach." Id. The 1920s were a period where consumers were indoctrinated into the "new economic gospel of consumption." Kerryn Higgs, A Brief History of Consumer Culture, MIT PRESS (Jan. 11, 2011), https://thereader.mitpress.mit.edu/a-brief-history-of-consumer-culture/ [https://perma.cc/Y4QZU476]. Corporate America in the 1920s worried that a lack of desire for consumption would whittle away the progress made during the industrial revolution and decided that the American consumer had to be indoctrinated into the need to "buy and buy lavishly." Id. Slowly but surely the corporate advertising machine began to focus on the need for consumption, doing away with the prior reverence for the concept of thrift. See id. (discussing the tactics used by corporate America to shiftthe consumption narrative). The need for "ever-extendable consumer desire" was characterized as "progress" and as a "means to perpetuate economic growth." Id.

64 See Higgs, supra note 63 (describing the growth and creation of the consumer economy in the United States and its close relation to the credit provision industry).

65 See Holly Johnson, History of Credit Cards: A Brief Overview, TIME, https://time.com/ personal-finance/article/history-of-credit-cards/ [https://perma.cc/LKZ5-9MWL] (Jan. 8, 2024) (noting that the first credit cards for multipurpose use began to appear in the 1950s); see also Olegario, supra note 60 ("The credit cards constituted the first large-scale implementation of adjustable interest rates on consumer loans, and one which also introduced the borrower to the risk of fluctuating interest rates."). Although versions of credit cards had existed prior to the introduction of the Diners Club Card (Western Union's Metal Money and the Charga-Plate both being examples), the Diners Club Card was the first to truly spawn the proliferation of credit cards across the country. See Johnson, supra note 65 (discussing the aftermath of the introduction of the Diners Club Card).

66 See Johnson, supra note 65 (stating that the arrival of the Diners Club Card on the marketplace ushered in a new conception of how to pay for expenses). The story behind the Diners Club Card is one that deserves a closer look, and it begins with one man: Frank McNamara. Id. In 1949, McNamara dined out at a restaurant in New York City and was embarrassed when, upon receipt of the check, he realized he had forgotten his wallet at home and could not pay the bill (his wife had to go home and get his wallet and bring it back to the restaurant). The Story Behind the Card, DINERS CLUB INTERNATIONAL, https://www.dinersclubus.com/home/about/dinersclub/story [https://perma.cc/EPE6-8M58]; see also Alan Flippen, The Dawn of Diners Club, and the Credit Card, N.Y. TIMES (Oct. 23, 2014), https:// www.nytimes.com/2014/10/24/upshot/the-dawn-of-diners-club-and-the-credit-card.html [https://perma. cc/97CF-HKVE] (describing the card's genesis and the media's original gloss over its arrival on the marketplace). Seeking to avoid future embarrassment, McNamara and his business partner Ralph Schneider put in place a card that could be used solely for "entertainment and travel needs." Olegario, supra note 60. The original card was made of cardboard and charged a high fee of seven percent of the transaction cost to merchants; however, after only its first anniversary, Diners Club had attracted 42,000 members. Claire Tsosie, The History of the Credit Card, NERDWALLET, https://www.nerd wallet.com/article/credit-cards/history-credit-card [https://perma.cc/QP4Z-5E8V] (Mar. 15, 2021). With its twin promises of increased convenience for the consumer and increased likelihood for retailers that card users would spend more money on each transaction, the card's use grew rapidly. Id. The card quickly entered the national zeitgeist-even attracting the attention of the character Holly Golightly in the film, Breakfast at Tiffany's. The Story Behind the Card, supra; see also BREAKFAST AT TIFFANY'S (Paramount Pictures 1961) (offering one of the earliest mentions of a precursor to credit cards in popular culture).

67 See Flippen, supra note 66 (describing early credit card marketing methods).

68 See Frankel, supra note 56 (discussing the mechanics of the Diners Club cards).

69 See Olegario, supra note 60 (noting the rapid development and innovations within the credit card industry). Revolving credit refers to a credit line that "remains available even as you pay the balance." See Alicia Tuovila, What Is Revolving Credit?: What It Is, How It Works, and Examples, INVESTOPEDIA (May 24, 2023), https://www.investopedia.com/terms/r/revolvingcredit.asp#:~:text= Revolving%20credit%20is%20a%20credit,full%2C%20or%20make%20regular%20payments [https:// perma.cc/RR46-UBHV] (offering a basic explanation of the financial concepts behind revolving credit). Card users can continually access the credit available on the card, and each subsequent payment, "minus the interest and fees charged, opens the credit again" to the card user. Id. Although this enables greater flexibility for the card user, it also means that a card user must "pay interest on any balance that is carried over" from month to month, and revolving credit lines (e.g., credit cards) will usually command higher interest rates than other types of consumer loans-adding greater profitability to the entire industry. Id.

70 See Olegario, supra note 60 (covering the rapid expansion of the credit card industry). By 1986, "[j]ust over half" of all American households had a bank credit card. Id. "Average annual charges escalated from $885 to $3,753 through the 1980s, representing a leap that was twice as great as the rise in disposable income" and suggested that the convenience originally promised by Diners Club was being taken advantage of by consumers. Id.

71 Id.

72 See Tsosie, supra note 66 (describing the origins of Visa and Mastercard).

73 Id. Originally, consumers chose cards based on the network "since the logo on [the] card affected where it might be accepted[,]" but as "merchant acceptance . . . became ubiquitous" card issuers began an arms war based around the adding of myriad benefits to their cards to woo potential customers. Id.

74 See Johnson, supra note 65 (describing the effects of banks and cards all moving toward the Visa and Mastercard networks).

75 See Alexandria White, Here's the Difference Between a Credit Card Network and Card Issuer, CNBC, https://www.cnbc.com/select/credit-card-network-vs-card-issuer-difference/ [https://perma.cc/ L338-K4YV] (May 17, 2023) (describing the mechanics behind how credit cards operate).

76 Id. Card networks determine where cards can be accepted and offer the technological mechanics behind the processing of a transaction. Id. Card issuers are financial institutions that provide the physical cards and capital needed to pay for each transaction. Id. Card issuers are also responsible for approving applications for cards, setting terms, and deciding what sorts of benefits to offer. Id.

77 See id. (describing the mechanics behind payment using a credit card). When a card is swiped, the card network, such as Visa, facilitates the transaction between the retailer and the card issuer, such as Bank of America, recognizing this charge, the card issuer then sends the money to the retailer, via the card network, and places a credit charge on the consumer's account. See Rebecca Lake, How Do Credit Cards Work?, INVESTOPEDIA, https://www.investopedia.com/how-do-credit-cards-work- 5025119 [https://perma.cc/GFC5-TYE5] (Dec. 20, 2023) (providing added context for the details of transactions between retailers and card issuers). Companies like Amex and Discover occupy both sides of this split and offer both the facilitating network and the bank behind the transaction when reusing their cards. See White, supra note 75 (describing how Amex and Discover differ from other card issuers).

78 See Olegario, supra note 60 (discussing the fight among credit card companies to widen their customer base). For example, college campuses became a new battleground for these companies, and there were many documented instances of students signing up for cards without any parental consent. Id. Institutions of higher education were complicit in these marketing tactics, and many provided their students' contact information to credit card companies for a fee. Id. These strategies proved effective and by 1996, "two-thirds of students in four-year institutions had a bank credit card." Id. The United States Supreme Court's decisions in Marquette National Bank v. First National Bank in 1978 and in Smiley v. Citibank in 1996 "effectively removed any last remains of regulations concerning interest rates and fees." Id. This meant that credit card companies could charge ever-higher interest rates without fear of state interference, and a report in 2002 found that "50 percent of credit card users paid only the minimum monthly amount due on their outstanding balances"-foreshadowing a dangerous reliance on these cards. Id.

79 See Johnson, supra note 65 (noting that it was not until 1974 that women could sign up for a card without a male cosigner); see also Freeman, supra note 38, at 1073-80 (offering a broad overview of documented cases of overt racism in the credit card industry). The current wealth gap between Blacks and whites in the United States is not an accident; rather, it is the "product of a long history of discriminatory laws and policies that inscribed racial disparities into society." Freeman, supra note 38, at 1081. A key player in the continued economic subjugation of the Black community is a dearth of options for access to credit. Id. at 1094. After decades of economic discrimination, which has contributed to a lack of a "safety net of wealth" for many Black families, a sudden uninvited expense has the potential to cause an immediate, irreversible financial crisis. Id. The need for access to credit in the United States is uniquely magnified by the overall lack of provided government assistance when compared to other developed countries. Id. Credit has become an "indispensable survival tool for both the lower and middle classes." Id. at 1095.

80 See supra notes 13-24 and accompanying text.

81 See Edward J. Bird, Paul A. Hagstrom & Robert Wild, Credit Card Debts of the Poor: High and Rising, 18 J. POL'Y ANALYSIS & MGMT. 125, 127 (1999) (discussing the use of credit cards as an addition to the "social insurance system"); see also Freeman, supra note 38, at 1095 (noting that credit is a key tool for economic survival in lower-income consumers). In the latter half of the twentieth century, household debt rose from "about 50 percent of disposable income in 1970 to over 80 percent in 1995." Bird et al., supra, at 126. As this debt has risen, so too has the composition of this debt that is tied to credit cards. Id. Those at the bottom end of the socioeconomic spectrum are thus particularly vulnerable to the risks inherent in credit cards as an event as simple as a minor visit to the doctor may necessitate use of a credit card and the incurring of a charge they cannot afford to pay off-creating a vicious cycle of debt for an individual. See id. at 127 (noting that individuals "closer to subsistence consumption levels" are particularly vulnerable to so-called "income shocks").

82 See Bird et al., supra note 81, at 133 (analyzing the financial vulnerability created when lowerincome earners depend heavily on credit cards). Credit cards are now the facilitators of that elusive American dream that was first pushed down consumers' throats in the early twentieth century; as they enable individuals to instantaneously consume products that they may not be able to pay for in the future. See Matthew J. Bernthal, David Crockett & Randall L. Rose, Credit Cards as Lifestyle Facilitators, 32 J. CONSUMER RSCH. 130, 130 (2005) (discussing the instant reward and access to easy consumerism that credit cards offer). Credit cards "facilitate a level of participation in contemporary consumer culture" that, years ago, would have been impossible without this unfettered access to lines of credit. Id.

83 See Bernthal et al., supra note 82, at 134 (noting that credit card usage is a "form of embodied cultural capital"). Credit cards now "span both cultural and economic forms of capital." Id. at 137. Cards are seen as key in "maintaining current levels of [material] consumption" and can, hypothetically, aid in shaping a lifestyle to a certain vaunted ideal. Id. at 135.

84 See Wilks, supra note 58, at 336 (discussing the social capital that can be gained through the use of credit cards). Credit cards are seen as "prosperity markers" that signal one's social strata. Id. Furthermore, "not having a credit card . . . can be its own source of stigma." Id.

85 See id. (noting that consumers often seek to copy the lifestyle choices they see in media and other forms of popular culture). In a society where advertising constantly demands that consumers attempt to "mimic [the] lifestyles[,]" outfits, travel destinations, and other various purchasing choices, the possession of a premium credit card is seen as a shortcut to accessing a life where all things and experiences can be easily purchased. Id.; see also Chase, See the World Like an Insider with Chase Sapphire Reserve, YOUTUBE (Jan. 16, 2024), https://www.youtube.com/watch?v=AgFQNeYQS-0 [https://perma.cc/V8N9-8H34] (offering a glimpse of what life would be like if one signs up for a Chase credit card). Credit card advertisements are filled with jaw-dropping views, luxurious experiences, and often feature celebrities (such as Michael B. Jordan) who espouse what life could be like if you had certain material goods and experiences. See generally See the World Like an Insider with Chase Sapphire Reserve, supra (suggesting the luxurious world that can, supposedly, be achieved when in possession of a premium credit card). Research also suggests that swiping a credit card, instead of handing over physical money, exploits a primal excitement of immediate reward that is then only dampened when a bill arrives weeks later. See Drazen Prelec & Sachin Banker, How Credit Cards Activate the Reward Center of Our Brain and Drive Spending, MIT SLOAN SCH. OF MGMT. (June 9, 2021), https://mitsloan.mit.edu/experts/how-credit-cards-activate-reward-center-our-brainsanddrive-spending [https://perma.cc/29YT-7JQL] (offering research from a study examining differing habits when using different methods of payment). The swiping of a credit card produces an "immediate pleasure" in the form of the goods or services received, with none of the physical experience of handing over multiples bills at the register-an experience that is more directly symbolic of the financial burden being exerted. Id. Reality then hits when the consumer receives a bill in the mail weeks or months later. See id. (discussing the experience of receiving a credit card bill after purchases have been made).

86 See Keiles, supra note 4 (noting that interchange fees are the "meat and potatoes" of the credit card reward industry).

87 See VOX, Who Actually Pays for Your Credit Card Rewards?, YOUTUBE (Feb. 15, 2019), https://www.youtube.com/watch?v=ySH5SudRwak [https://perma.cc/7S5M-747V] (offering a helpful illustration of how a business interacts with users of different types of credit cards). As an example, historically many retailers did not accept Amex cards as their interchange fees "tended" to be higher than those of Visa, Mastercard, or Discover. Sara Rathner & Lindsay Konsko, Where Is American Express Accepted?, NERDWALLET, https://www.nerdwallet.com/article/credit-cards/retailers-acceptamericanexpress [https://perma.cc/CKA6-F57C] (Mar. 15, 2023). Many small businesses operating on smaller budgets decided to forego their acceptance entirely. Id. In recent years, close to 99% of domestic retailers now accept Amex branded cards. Id.

88 See Shy, supra note 28 (noting that, in 2021, "28% of all purchases were made with credit cards"). A 1996 survey completed by the accounting firm Ernst & Young noted that eighty-three percent of merchants surveyed "indicated" that accepting credit cards would likely boost their sales. See Steven Semeraro, The Reverse-Robin Hood Cross-Subsidy Hypothesis: Do Credit Card Systems Tax the Poor and Reward the Rich?, 40 RUTGERS L.J. 419, 431 (2009) (noting the opinions of merchants toward purchases made on credit card).

89 See Lardner, supra note 26 (describing that the "the great majority of retailers" set their pricing of goods and services to include the interchange fees). Interchange fees themselves have risen over the years, meaning that the entire credit card fee structure has increased costs of goods for all Americans as retailers work to keep pace with rising costs of doing business. See Efraim Berkovich & Zheli He, Rewarding the Rich: Cross Subsidies from Interchange Fees, HISPANIC LEADERSHIP FUND (May 3, 2022), https://hispanicleadershipfund.org/wp-content/uploads/2022/05/HLF_Report_RewardingThe Rich-InterchangeFees_03May22.pdf [https://perma.cc/9WNX-BQ6E] (discussing how the structure of interchange fees affects price tags for all consumers, regardless of what form of payment is used at the register). These rising fees then greatly harm small businesses who are unable to more efficiently absorb rising costs for fear of losing customers to larger chain stores. See id. (noting that rising interchange fees particularly harm small businesses).

90 See Schuh et al., supra note 25 (finding that those who do not use credit cards in purchases subsidize the rewards of those who do). Generally, the term "lower-tiered credit cards" refers to those cards that do not necessitate an annual fee or a high annual spending requirement. Compare Ben Luthi, Best Credit Cards for Low-Income Earners of 2024, FORBES, https://www.forbes.com/advisor/credit-cards/best/low-income/ [https://perma.cc/A9SK-GCVK] (Oct. 25, 2024) (noting the overall less lucrative rewards programs of these cards), with Alexandria White, Best Luxury and Premium Credit Cards of November 2024, CNBC, https://www.cnbc.com/select/best-luxury-credit-cards/ [https:// perma.cc/HCK3-S2FZ] (Oct. 29, 2024) (describing the plethora of rewards offered to those who use luxury, or premium, credit cards).

91 Schuh et al., supra note 25.

92 Id. Merely having access to a rewards-based credit card does not necessarily mean that an individual is only drawing benefits from the system-a person with a rewards credit card from a lower tier still subsidizes those who pay for items using a premium card. See Michael A. Turner, Credit Card Rewards: Context, History, and Value, POL'Y & ECON. RSCH. COUNCIL (2012) https://www.perc.net/ wp-content/uploads/2013/12/WP-2-Layout.pdf [https://perma.cc/4SBG-VRXH] (describing that seventynine percent of people with credit cards in 2012 had a rewards-based credit card). Even in groups who earn $20,000 or less a year, as of 2012, seventy percent held a credit card. Id. Not wanting to lose out on valuable sales, businesses will still attempt to ensure that their pricing accounts for customers who use these ultra-luxe cards-even if it means substantially raising prices to ensure that their interchange fees are covered. See VOX, supra note 87 (discussing the different interchange fees charged for different tiers of cards).

93 See Schuh et al., supra note 25 (describing the "strong positive correlation" between increased credit card usage and greater household incomes). To offer an example of how increased credit card use can exponentially increase the rewards available to a consumer, consider this example from NerdWallet's Chase points calculator. See Sam Kemmis, What's the Value of Chase Ultimate Rewards Points, NERDWALLET, https://www.nerdwallet.com/article/travel/chase-ultimate-rewards-pointsvalue [https://perma.cc/8YRN-H35V] (Oct. 18, 2024) (offering NerdWallet's analysis as to the value of Chase's Ultimate Reward Points). Imagine that an individual in an high-income bracket has bought the plane tickets needed for a fabulous African safari vacation for their family at a cost of $10,000 (all paid for using Chase's Sapphire Reserve Card and bought on Chase's online travel portal); from that transaction the individual would have, gained, roughly, 50,000 Ultimate Rewards Points (depending on promotions and other incentive features); which, according to NerdWallet are worth either $750, when used to book future travel through Chase's travel portal, or up to $1,100 if the points are transferred to a "transfer partner" (such as an airline, car rental agency, or hotel conglomerate). See id. (calculating the combined benefits of points gained through use of a Chase credit card).

94 See Berkovich & He, supra note 89, at 39 (noting the inequality in credit card rewards systems). Research suggests that "households making less than $75k annually [transfer] $3.5 billion per year to the . . . households making more than $75K [annually]." Id.

95 Id. Research suggests that, due to the upward transfer of wealth via credit card rewards points, Black families in the United States "lose more than $1 billion each year from these transfers." Id.

96 Kendall Little & Christopher Murray, Credit Card Statistics by Race and Ethnicity, BANKRATE (June 7, 2023), https://www.bankrate.com/credit-cards/news/credit-cards-and-race-statistics/ [https:// perma.cc/KQR9-WCTB].

97 See Lardner, supra note 26 (noting how credit cards are "instruments of upward income redistribution"). Of the $3.5 billion transferred upward in rewards each year, "[m]ore than a billion dollars of this total came from families making less than twenty thousand dollars." Id. Eighty percent of white families report having a credit card, compared to seventy-four percent of Hispanic families and only sixty percent of Black families. Id.

98 See White, supra note 90 (offering a rough definition for what qualifies as a premium credit card). Most premium credit cards mandate that applicants' credit scores be 670 or above to be eligible for approval. Id.; see also Chip Lupo, How Do You Qualify for a Premium Credit Card?, WALLETHUB, https://wallethub.com/answers/cc/how-do-you-qualify-for-a-premium-credit-card-2140831255/ [https://perma.cc/9L6Q-EHS2] (Jan. 16, 2024) (noting that many premium credit cards have covert annual income requirements for approval). The term premium, or luxury, credit card is roughly used to describe those cards that require a high credit score to be approved, set a high annual fee, and offer a significant diversity of reward benefits. See White, supra note 90 (describing what benefits come with having a premium credit card). The most well-known of these cards are the Amex Gold Card, the Chase Sapphire Reserve, and the Capital One Venture X Rewards-names that are ubiquitous from a plethora of television and print commercials. Id.

99 See Megan Leonhardt, Black and Hispanic Americans Often Have Lower Credit Scores- Here's Why They're Hit Harder, CNBC (Jan. 28, 2021), https://www.cnbc.com/2021/01/28/blackandhispanic-americans-often-have-lower-credit-scores.html [https://perma.cc/6GP2-KLSG] (describing the lower levels of credit scores among Black and Hispanic Americans); see also Little & Murray, supra note 96 (describing the devastating effects of redlining and its impact on the building of credit scores among racial minorities). Around "54% of Black Americans report having no credit score or a poor to fair credit score[,]" but only 37% of white Americans fall within this classification. Leonhardt, supra. Furthermore, independent of access to premium credit cards with their luxurious benefits, poor credit scores can have long-lasting financial consequences and can impact housing options, choice of jobs, mental health, transportation options, and other aspects of one's active engagement in the economy. Id. Fixing the inherent issues in this system and offering more equitable credit-building opportunities is a key, and often overlooked, step in advancing racial and financial equity. See id. (noting how access to better credit building opportunities would have wide-reaching positive effects); see also Bernice A. King & Ashley Bell, Credit Scoring Is Pseudo-science-and It Perpetuates the Consequences of Slavery and Segregation, FORTUNE (Apr. 19, 2023), https://fortune.com/2023/04/19/creditscoringpseudoscienc-perpetuates-consequences-of-slavery-segregation-finance-banks-diversity-kingbell/ [https://perma.cc/3QG7-YEH3] (describing how the algorithms that determine one's credit score are influenced by "generations of systemic oppression and financial exclusion of people of color"). As noted above, poor credit scores have far-reaching consequences and are a severe inhibitor of Black and Hispanic families being able to access quality home mortgage loans-excluding many such fami lies from accessing a key building block in gaining generational financial security. See King & Bell, supra (noting that "[i]n 2022, Black mortgage applicants were denied at a rate 84% higher than white borrowers"). Studies have also shown that Black families were then charged higher interest rates and fees for their mortgages, when approved, "at an average of almost 0.08%" higher than white families. Id.

100 See Johnson, supra note 65 (listing the key credit card regulations passed by the U.S. Congress).

101 See Expressions Hair Design v. Schneiderman, 581 U.S. 37, 40 (2017) (finding that a New York law that prohibited businesses from imposing a surcharge on transactions where a consumer used a credit card, as opposed to cash, implicated the First Amendment as it regulated how sellers could communicate their prices to the broader public), remanded to 877 F.3d 99 (2nd Cir. 2017), certifying questions to 92 N.E.3d 803 (N.Y. 2018). The Court noted that the law did not simply mandate how much a merchant would "collect from a cash or credit card payer"; rather, it held that the law regulated "how sellers may communicate their prices" to a potential consumer. Id. at 47. The Court held that a merchant wanting to use a "single sticker price" had to post a price that included the credit card surcharge. See id. (noting that because the law regulated "the communication of prices rather than prices themselves" it regulated speech). Because the Court found that the law implicated a First Amendment issue, it was remanded to the U.S. Court of Appeals for the Second Circuit, which then certified questions to the Court of Appeals of New York, which, in 2018, held that retailers could utilize a higher price for credit card users so long as the price was listed in the total dollar amount and not advertised as a percent increase over the cash price. See Expressions Hair Design v. Schneiderman, 117 N.E.3d 730, 737 (N.Y. 2018) (discussing the holding). The court's ruling focused on ensuring that customers would not be deceived by retailers when attempting to pay with credit cards and that a strict wording of the opinion required that retailers clearly post the highest price to not run afoul of the law. See id. at 735 (discussing the legislative history of the law at issue). In 2018, in Ohio v. American Express Co., the United States Supreme Court ruled that Amex did not violate federal antitrust law by including antisteering provisions in its contracts with merchants. 585 U.S. 529, 534 (2018). Antisteering provisions are parts of a contract that require that, once a customer is in a store, a merchant cannot attempt to persuade that individual from using a different form of credit card payment. See id. (offering a brief definition of the term "antisteering"). Importantly though, these provisions do not prevent merchants "from steering customers toward debit cards, checks, or cash." Id. at 539. The Court found that the respondent had violated no federal antitrust law in their inclusion of antisteering provisions. Id. at 542.

102 See Tsosie, supra note 66 (noting the early problems facing consumers active in the credit card industry); see also The Truth in Lending Act of 1968, 15 U.S.C. § 1601(a) ("The informed use of credit results from an awareness of the cost thereof by consumers.").

103 See Tsosie, supra note 66 (discussing the basic repercussions of the Truth in Lending Act (TILA)); see also § 1601 (noting Congress's purpose in enacting the TILA). One of the most important aspects of the TILA was that it mandated that information regarding interest rates be "conspicuous on documents presented to the borrower before signing" up for a card-giving the consumer greater awareness and agency. Will Kenton, Truth in Lending Act (TILA): Consumer Protections and Disclosures, INVESTOPEDIA, https://www.investopedia.com/terms/t/tila.asp [https://perma.cc/3S9NPTTG] (Apr. 30, 2024). The TILA "reflects a transition in congressional policy from a philosophy of 'Let the buyer beware' to one of 'Let the seller disclose.'" Mourning v. Family Publ'ns Serv., Inc., 411 U.S. 356, 377 (1973).

104 See § 1601(a) ("Congress finds that economic stabilization would be enhanced and the competition among various financial institutions . . . engaged in the extension of consumer credit would be strengthened by the informed use of credit."); see also Tsosie, supra note 66 (discussing some of the predatory practices used by lenders). The TILA "requires that the issuers of credit provided the costs of borrowing in a clear and obvious manner" to directly combat the "predatory practices" engaged in by many players in the market before the bill's passage. Kenton, supra note 103.

105 See Johnson, supra note 65 (discussing the passage of the Fair Credit Billing Act (FCBA)). The FCBA also mandated that lenders "promptly" post any payments made by consumers to their accounts. Id.

106 Fair Credit Billing Act, 15 U.S.C. § 1666; see Johnson, supra note 65 (describing the FCBA's impact).

107 See § 1666f(a) (barring card issuers from prohibiting sellers to offer discounts to consumers who pay via non-card payments).

108 See Equal Credit Opportunity Act, 15 U.S.C. § 1691 (describing what activities count as discrimination under the Equal Credit Opportunity Act (ECOA)); see also Johnson, supra note 65 (discussing the passage of the ECOA).

109 15 U.S.C. § 1691(a)(1). In 2021, the Consumer Financial Protection Bureau (CFPB) explicitly noted that the ECOA's protections also included protection from discrimination on the basis of one's gender identity or sexual orientation. See Press Release, CFBP Clarifies That Discrimination by Lenders on the Basis of Sexual Orientation and Gender Identity Is Illegal, CFPB (Mar. 9, 2021), https://www.consumerfinance.gov/about-us/newsroom/cfpb-clarifies-discrimination-by-lenders-onbasisof-sexual-orientation-and-gender-identity-is-illegal/ [https://perma.cc/9ZAW-SMJ8] (clarifying the CFPB's stance regarding discrimination based on sexual orientation and gender identity in the wake of the United States Supreme Court's 2020 decision in Bostock v. Clayton County).

110 See Fair Debt Collection Practices Act, 15 U.S.C. § 1692 (providing an overview of the act's purpose and congressional findings); see also Johnson, supra note 65 (discussing the passage of the Fair Debt Collections Practices Act (FDCPA)). The FDCPA statement of purpose went so far as to explicitly recognize that "[e]xisting laws and procedures" for protecting consumers were "inadequate." § 1692. The FDCPA and its forebears in the 1960s and 1970s have been noted as making up the "third wave of the consumer [protection] movement." Neil L. Sobol, Consumer Law for Gen Z Law Students, 66 ARIZ. L. REV. 93, 108 (2024). The first wave of consumer protection, occurring in the early 1900s, was defined by a growing sense of "consumer consciousness" built on the backs of increased "consumer education"; and the second wave, occurring in the wake of the Great Depression, was focused, among other things, on the rise of "increased consumer product testing[,]" as cash poor consumers sought to ensure they were receiving the best quality product for their money. See id. at 105-08 (providing overviews of the first two waves of consumer protection). The second wave saw the rise of what would become Consumer Reports-a media source that is still highly prevalent in consumer decision-making today. Id. at 106. In 1962, President John F. Kennedy gave a speech to Congress that called for a "Consumer Bill of Rights: the right to safety; the right to be informed; the right to choose; and the right to be heard in government decision-making." Id. at 109 (quoting Stephen Brobeck & Robert J. Hobbs, The Consumer Movement, in ROBERT J. HOBBS & STEPHEN GARDNER, THE PRACTICE OF CONSUMER LAW: SEEKING ECONOMIC JUSTICE 5-12 (2d ed. 2006)).

111 See Matthew R. Bremner, Note, The Fair Debt Collection Practices Act: The Need for Reform in the Age of Financial Chaos, 76 BROOK. L. REV. 1553, 1553 (2011) (discussing the primary goals of the FDCPA). The FDCPA did create a "private cause of action" and empowered the Federal Trade Commission to use its "enforcement powers"; however, commentators have argued that it necessitated "more severe penalties" to truly effectively combat predatory debt collectors. Id. at 1561-64.

112 See supra notes 100-111 and accompanying text.

113 See Credit Card Accountability Responsibility and Disclosure Act of 2009, Pub. L. No. 111- 24, 123 Stat. 1734, 1734 (2009) (discussing the amendments to the TILA); see also Credit Card Accountability Responsibility and Disclosure Act of 2009, CORNELL L. SCH. LEGAL INFO. INST., https:// www.law.cornell.edu/wex/credit_card_accountability_responsibility_and_disclosure_act_of_2009 [https://perma.cc/78Z6-VGTA] (July 2022) (describing the details of the CARD Act). In setting additional disclosure requirements, the CARD Act mandated that credit card companies offer information on each billing statement that would describe how long it would hypothetically take to pay offdebt if consumers simply made the minimum payment required each month. CORNELL L. SCH. LEGAL INFO. INST., supra. It also required that companies better lay out directions for consumers to access their annual credit report. Id. Before the enactment of the CARD Act, credit card disclosures were notoriously difficult to read, and studies found that the "structure of the disclosures" made it almost impossible for some consumers to understand the risks and costs associated with their own card. Jaclyn Rodriguez, The Credit CARD Act of 2009: An Effective but Incomplete Solution Evidencing the Need for a Federal Regulator, 14 N.C. BANKING INST. 309, 318 (2010). The "average American adult reads at an eighth-grade level" and most disclosure offered in credit cards was written "at a tenth-grade level or higher" making it extremely difficult for many to understand the implications of what they were signing up for. Id. Credit card disclosures were also, by and large, "poorly organized and formatted[,]" making just navigating a card's information a maze. Id. at 319; see also U.S. GOV'T ACCOUNTABILITY OFF., GAO-06-929, CREDIT CARDS: INCREASED COMPLEXITY IN RATES AND FEES HEIGHTENS NEED FOR MORE EFFECTIVE DISCLOSURES TO CONSUMERS 41 (2006) (discussing the inherent issues in deciphering credit card disclosures). To its credit, the CARD Act required that the disclosure language be written in plain English, and it mandated that certain fees had to be highlighted with explanations as to why a consumer might be charged for certain things. Rodriguez, supra, at 319. As the necessity of its passage suggests, credit card companies "will [likely] continue to prioritize their profit over the cardholders understanding and financial safety" and may only "adapt and create new anticonsumer practices" for the sake of profit. Id. at 332.

114 See CORNELL L. SCH. LEGAL INFO. INST., supra note 113 ("A large part of the Credit CARD Act of 2009 is designed to encourage the flow of information to allow consumers to make more informed choices."). Although there is empirical evidence to support that consumers will change their habits for the better when confronted with a more detailed disclosure regarding the item they are consuming, this movement still seems to shiftthe "blame" onto the consumer instead of making it the producer/company's role to better monitor the effects of the products it puts onto the marketplace. See John Cawley, Alex Susskind & Barton Willage, The Impact of Information Disclosure on Consumer Behavior: Evidence from a Randomized Field Experiment of Calorie Labels on Restaurant Menus, 39 J. POL'Y ANALYSIS & MGMT. 1020, 1035-36 (2020) (finding that when calorie counts are published in a menu, individuals tend to order fewer calories); see also William K. Brandt & George S. Day, Information Disclosure and Consumer Behavior: An Empirical Evaluation of Truth-in-Lending, 7 U. MICH. J.L. REFORM 297, 327 (1974) (finding that immediately after the passage of the TILA, only moderate increases in consumer knowledge about interest rates were observed). In the time directly following the passage of the TILA, evidence suggested that consumers were only minimally aware of how they "might use the credit information in the future" and that the immediate repercussions had "little influence on their comparison shopping." Brandt & Day, supra, at 327.

115 See Rodriguez, supra note 113, at 324 (nothing how credit card companies changed their practices to retain profits after the passage of the CARD Act). Like most legislation, the aftermath of the passage of the CARD Act required that credit card companies update almost "every aspect of their current business model." Id. at 322. Given the changes it required in disclosure and billing practices, companies had to update infrastructure, retrain additional customer service personnel, and overhaul billing practices-all changes that required time, energy, and a loss of previously available profits. See id. at 322-23 (describing the changes the industry had to make in the wake of the CARD Act's passage).

116 Id. at 324-25 (discussing credit card companies' responses to the CARD Act). Some representatives from Congress naïvely "asked credit card issuers not to raise interest rates" shortly before the CARD Act was passed. Id. at 324. Unsurprisingly, the companies paid no heed and proceeded to increase rates (presumably influenced by the lack of former profit streams and the aftermath of the global financial crisis of the early twenty-first century). See id. at 325 (discussing the imposition of higher interest rates).

117 See Eliot C. Schaefer, The Credit Card Act of 2009 Was Not Enough: A National Usury Rate Would Provide Consumers with the Protection They Need, 41 U. BALT. L. REV. 741, 761 (2012) (arguing that a national usury rate should be in place to protect consumers from corporate profit hunting); see also Rodriguez, supra note 113, at 328 (noting that a more powerful regulatory agency would be beneficial to monitor credit card companies). Although the CARD Act did make meaningful progress in certain arenas, in its direct aftermath, credit card issuers, faced with a lower revenue because of the act's requirements, merely changed practices to "maintain profit levels." Rodriguez, supra note 113, at 324. Although credit card issuers could once collect "billions of dollars by automatically charging a fee if a cardholder exceeded his credit limit[,]" by banning this practice the CARD Act had the effect of incentivizing credit card companies to simply raise interest rates or engage in myriad other profit-seeking endeavors. Id. This Note does not take the stance that credit cards should be stamped out entirely from society; instead, it readily recognizes the importance that access to lines of credit has in a functioning economy. See M. Greg Braswell & Elizabeth Chernow, Consumer Credit Law & Practice in the U.S., FTC, https://www.ftc.gov/sites/default/files/attachments/training-materials/law_practice.pdf [https:// perma.cc/BY4L-CHBX] (stating that access to credit "allows a well-managed economy to function more efficiently and stimulates economic growth"). Without a rethinking of our regulation and enforcement of the credit card industry, each passage of legislation that eats into companies' bottom lines will likely have the effect of continually harming those at the lower end of the socioeconomic spectrum. See Rodriguez, supra note 113, at 324-28 (offering examples of the different ways in which credit card companies have sought to increase profits after the passage of the CARD Act).

118 See Adam Hayes, Dodd-Frank Act: What It Does, Major Components, and Criticisms, INVESTOPEDIA, https://www.investopedia.com/terms/d/dodd-frank-financial-regulatory-reform-bill.asp [https://perma.cc/KTN4-N3YR] (July 11, 2024) (providing general background knowledge surrounding the Dodd-Frank Act); see also Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111-203, § 619, 123 Stat. 1376, 1920 (2010) (overhauling the system of financial regulation in the wake of the Great Recession).

119 See Julia Kagan, Durbin Amendment: What It Is, How It Works, Impact, INVESTOPEDIA, https://www.investopedia.com/terms/d/durbin-amendment.asp [https://perma.cc/PK4Z-SFFL] (Apr. 11, 2024) (discussing the general parameters and impacts of the Durbin Amendment).

120 See Press Release, Dick Durbin, U.S. Senator, Durbin Statement on His Debit Card Swipe Fee Amendment (May 13, 2010), https://www.durbin.senate.gov/newsroom/press-releases/durbinstatementon-his-debit-card-swipe-fee-amendment [https://perma.cc/Y4FQ-XBWD] (providing an overview of purpose behind the Durbin Amendment).

121 See Kagan, supra note 119 (noting that there is "some debate" as to the "efficacy and impact the amendment has had on consumers, retailers, and banks"); see also Mark D. Manuszak & Krzysztof Wozniak, The Impact of Price Controls in Two-Sided Markets, Evidence from US Debit Card Interchange Fee Regulation 5-6 (Bd. of Governors of the Fed. Rsrv. Sys. Fin. & Econ. Discussion Series, Working Paper, 2017), https://www.federalreserve.gov/econres/feds/files/2017074pap.pdf [https:// perma.cc/9RAE-DH6X] (offering substantive evidence of the negative repercussions of the Durbin Amendment's passage).

122 See Vladimir Mukharlyamov & Natasha Sarin, The Impact of the Durbin Amendment on Banks, Merchants, and Consumers, FAC. SCHOLARSHIP AT PENN CAREY L. (2019), https://scholarship.law. upenn.edu/faculty_scholarship/2046/ [https://perma.cc/P4CS-GLLM] (discussing the existence of "significant evidence" that banks merely raised fees in other sectors to account for the loss of revenue from the amendment). The share of free basic checking accounts offered dropped from "60 percent to 20 percent as a result of Durbin[,]" the average fees on accounts rose from "$4.34 a month to $7.44/month[,]" and the monthly minimums needed to avoid some of these also rose by "around 25 percent." Id. Data suggest that the profits from these fees across major banks directly correlate with the losses incurred by banks due to the passage of the Durbin Amendment. See id. (discussing the impacts of the amendment). Furthermore, the brunt of these increased fee burdens have been felt by "low-income consumers whose account balances do not meet the monthly minimum required for these fees to be waived." Id.

123 See id. (finding that, in examples of gas stations, only those with "significant interchange [fee] savings" have passed on lower prices to consumers). Even with this, there is only "limited evidence" for "across-the-board consumer gains." Id. Empirical data suggest that the Durbin Amendment has had the effect of a net loss on consumers' financial welfare "through higher bank fees" put in place in the wake of its introduction. Id. Some have gone so far as to note that the "most sympathetic" reading of the amendment's impacts is that it is had "zero impact on consumer welfare." Id. The Durbin Amendment led to the "virtual disappearance" of debit card rewards programs and did not deliver the promised lower retail prices to consumers. See Norbert Michel, Durbin Remains Persistent-And Misguided, FORBES (June 13, 2023), https://www.forbes.com/sites/norbertmichel/2023/06/13/durbinremainspersistent-and-misguided/?sh=5bce63221f5c [https://perma.cc/L9B6-FLRG] (discussing the aftermath of the Durbin Amendment and its negative outcomes).

124 See David S. Evans, Howard H. Chang & Steven Joyce, The Impact of the U.S. Debit Card Interchange Fee Caps on Consumer Welfare: An Event Study Analysis 1 (Coase-Sandor Institute for Law & Economics, Working Paper No. 658, 2013) (suggesting that consumers have "lost more on the bank side than they gained from the merchant side" as a result of the Durbin Amendment). Although the amendment did have the effect of permitting merchants to save "an estimated $7.3 billion in 2012" as a result of the cap on interchange fee revenues for banks with assets of $10 billion or greater, there is no evidence and no historical practice of retailers of passing on these savings to consumers. Id. at 2, 48-49. The data suggest that merchants did not give "enough of their gains back to consumers to compensate for the higher fees and reduced services" put in place by banks in the wake of the Durbin Amendment's passage. Id. at 48-49. There is also research that suggests that the Durbin Amendment has had "limited and unequal effects on merchants"-exactly those parties that the bill sought to help and benefit. Zhu Wang, Scarlett Schwartz & Neil Mitchell, The Impact of the Durbin Amendment on Merchants: A Survey Study, 100 FED. RSRV. BANK OF RICHMOND ECON. Q. 183, 207 (2014). Data suggest that only 11.1% of merchants surveyed saw "reduced debit costs for all transactions[,]" while close to 60% saw no change in their costs. Id. at 192. Furthermore, 76.6% of merchants did not change consumer-facing prices post the amendment-again suggesting that the bill had limited beneficial outcomes for the individual consumer. Id. at 194.

125 See Semeraro, supra note 88, at 435 (arguing that non-card users are actually better offwhen merchants accept all cards regardless of their supposed tier). If a retailer was to, hypothetically, completely stop accepting payment from consumers using premium cards, they would "likely lose sales to [those] competitors" who decide to accept higher-end cards to entice larger spenders into their stores. Id. When consumers use credit cards within their bounds and pay offany remaining balance at the end of each billing cycle, the cards have little to no negative effect on their financial wellbeing; rather, they may be beneficial in their ability to help an individual build credit, protect their finances from fraud, and stimulate economic growth by offering an easily accessible consumer credit stream. See id. at 449 (noting that when "cardholders . . . do not run balances[,]" credit cards "have very low or even negative costs" to consumers). When consumers who do not have access to credit cards need to pay for items, the costs associated with obtaining a rapid line of credit or the use of money orders can sometimes impose great financial burdens on consumers-more so than what would be imposed by using a credit card. Id. Furthermore, a major benefit to credit cards is their ability to easily protect against fraud. See Brett Holzhauer, Here Are 3 Reasons Why Paying with a Credit Card Is Safer Than a Debit Card or Cash, CNBC, https://www.cnbc.com/select/why-paying-with-credit-card-safer-thandebitcash/ [https://perma.cc/U9SJ-JSFH] (Mar. 15, 2024) (providing an overview of credit cards' safety mechanisms); see also Nevada State Bank, How Using a Credit Card Can Help Protect You from Fraud, YOUTUBE (May 23, 2013), https://www.youtube.com/watch?v=GrXxg3O8tzY [https:// perma.cc/A85K-3VGV] (noting that credit cards offer robust protection from liability from unauthorized purchases). This video is steeped with a sense of irony as the presenter is Frank Abagnale (famous for being a fraudster and the inspiration behind the movie Catch Me If You Can); yet, his presentation hammers home the point that, when used within their bounds, credit cards can help people build credit scores and avoid potentially life-shattering fraud issues. Id.

126 See supra notes 86-99 and accompanying text (explaining the documented inequities and upward transfer of wealth that the credit card industry preserves).

127 See Shy, supra note 28 (noting the "puzzling" fact that the Internal Revenue Service (IRS) "does not tax rewards"). Scholars have argued that "card rewards could be taxed as any other income." Id. Government social programs, "such as food stamps[,]" do not consider "credit card transaction costs"; rather, in failing to make an exception for the cost of processing interchange fees when an individual makes a purchase using food stamps, "taxpayers as a whole are subsidizing the use of credit cards." See Adam J. Levitin, Priceless? The Social Costs of Credit Card Merchant Restraints, 45 HARV. J. ON LEGIS. 1, 36-37 (2008) (noting that the government effectively subsidizes rewards via social assistance programs). Additionally, as many minority households are "disproportionately un banked" and, therefore, are more likely to use cash for most purchases, they are contributing to a "[s]ubsidization of credit consumers by cash consumers." Id. Simply put, this means that the "poor pay more." Id. (quoting the title of DAVID CAPLOVITZ, THE POOR PAY MORE (1967)). The concept of allowing credit card rewards to remain untaxed comes into direct confrontation with the tax policy principle of vertical equity, or the belief that "those who have the ability to pay more taxes should contribute more than those who are [sic] not." Julia Kagan, Vertical Equity: What It Is, How It Works, Example, INVESTOPEDIA, https://www.investopedia.com/terms/v/vertical_equity.asp [https://perma.cc/ 92ZN-BL4N] (Aug. 14, 2022). The most visible example of vertical equity currently operating in the American taxing scheme is the concept of progressive taxation. Id.

128 See Levitin, supra note 126, at 36 ("Frequent flier miles and other rewards programs are not enforced as income by the IRS and are, therefore, not taxed."). As previously mentioned, the entire credit card industry acts as a tool for an upward wealth redistribution from lower-income households to those of higher income-meaning that these effective subsidies benefit certain classes of people more than others and there is nothing currently being done to "recapture part of this subsidy through taxes." Id. In order to rectify these inequalities, some have said that "credit card rewards could be taxed as ordinary income." Semeraro, supra note 88, at 450. Furthermore, this reverse redistribution of wealth "should not be delegated to corporate bodies like credit card networks"; instead, this Note advocates for the federal government to take a heavier hand in regulation through the imposition of a taxing scheme. Levitin, supra note 126, at 36.

129 See White, supra note 90 (discussing the vast benefits that come with using premium credit cards). Although credit card rewards programs themselves arose out of straightforward untaxable rebate schemes, this Note posits that their unique nature, interconnectedness, and distinctive place in the economy has outgrown this classification and necessitates a reimagining. See supra notes 54-85 and accompanying text (describing the origins of credit rewards). Compare Turner, supra note 92, at 8 (noting that rewards-based credit cards can trace some of their roots to a simple 1929 Betty Crocker "free flatware" promotion), with Go See with SkyMiles, DELTA AIR LINES (2024), https://www.delta. com/us/en/skymiles/how-to-use-miles/overview [https://perma.cc/4JDL-BZV7] (offering a window into the complex redemption method for using frequent flyer miles that could be gained using a Delta and Amex cobranded card).

130 See Hunter Davis, Note, Stay Schemin': Tax Court's Recent Ruling on Credit Card Rewards and the Impact This Ruling Has on Future Rewards Programs, 57 GA. L. REV. 805, 805 (2023) (discussing the fact that both the IRS and the Tax Court have each, respectively, failed to take the first steps to end "this deferential dance"). The debate surrounding the taxation of credit card rewards has generated a bevy of opinions and differing views. See Emily Thompson & Chris Dong, Are Your Credit Card Rewards Taxable? Here's Why You're Receiving 1099s in the Mail, THE POINTS GUY, https://thepointsguy.com/credit-cards/complete-guide-to-paying-taxes-on-credit-card-rewards/ [https:// perma.cc/3GB2-QLN8] (Oct. 30, 2024) (noting that only certain rewards that require no spending, such as referral and automatic bonuses, are traditionally considered taxable income). But cf. Semeraro, supra note 88, at 450 ("[C]redit card rewards could be taxed as ordinary income.").

131 See infra notes 134-166 and accompanying text.

132 See infra notes 134-149 and accompanying text.

133 See infra notes 150-166 and accompanying text.

134 See I.R.C. § 61 ("[G]ross income means all income from whatever source derived."). This term has traditionally been "broadly interpreted." Shankar v. Comm'r, 143 T.C. 140, 147 (2014). Gross income's expansive interpretation has key doctrinal roots in the case Commissioner v. Glenshaw Glass Co., where the Court noted that the term gross income includes all "instances of undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion." 348 U.S. 426, 431 (1955). This phrase has created a three-part test that the Court has used on repeated occasions to determine income. See United States v. Garber, 607 F.2d 92, 103 (5th Cir. 1979) (offering an example of the applicability of the test and finding that the "income in this case falls within the confines of the income definition enunciated in Glenshaw Glass"). This broad interpretation has its roots in the arching language of the Sixteenth Amendment, which clearly states that "Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration." U.S. CONST. amend. XVI.

135 Glenshaw Glass, 348 U.S. at 429.

136 Id. at 430. Commentators have used the expansive view of income put forth by the Court in Glenshaw Glass to question why such things as frequent flyer miles are not included in the definition of income set forth in § 61(a) of the Internal Revenue Code (IRC or Code)-laying a potential groundwork for turning this questioning lens to the issue of credit card rewards. See Dominic L. Daher, The Proposed Federal Taxation of Frequent Flyer Miles Received from Employers: Good Tax Policy but Bad Politics, 16 AKRON TAX J. 1, 5 (2001) (utilizing the reasoning in Glenshaw to question whether frequent flyer miles accrued via business travel and then used for personal travel should be included in income).

137 See Darrell L. Oliveira, The Taxability of Frequent Flyer Credits Earned by Employees: Why the IRS Has Remained Silent on the Issue, 4 U. PA. J. LAB. & EMP. L. 643, 644 (2002) (noting the passive path taken by the IRS with respect to taxing credit card rewards). Given the IRS's willingness to classify other new forms of income as being subject to tax, the overall unwillingness of the IRS to confront the credit card rewards issue becomes even more bizarre. See Jennifer A. Cunningham, Note, Are Frequent Flyer Benefits Really Benefits?: An Analysis of the Frequent Flyer Tax Debate and aNew Theory of Taxability for Frequent Flyer Benefits, 47 CLEV. ST. L. REV. 281, 291 (1999) (underlining the surprising nature of the IRS's inaction on the issue of taxing credit card rewards). Some commentators have called into question whether this inaction arises out of political pressure from actors who are wary of "alienat[ing] their constituents-taxpayers who are quite fond of what they see as a freebie from airlines" and credit card companies. Id. Blame may also be placed on an overall "reluctance" to dive into an area where there is a lack of a defined precedent and an admittedly large issue of how to "administer[] the taxation of the benefits" festering in the background. Id.

138 See Robertson v. United States, 343 U.S. 711, 711 (1952) (holding that a cash award given to a musician was taxable income); see also Cunningham, supra note 137, at 301-02 (discussing the broad and expansive reach that the courts and the federal government have afforded to the term "income"). Since the adoption of the Sixteenth Amendment, both the courts and the IRS have used a broad definition of income, and to imagine any narrower of an understanding of the term would be to ignore decades of precedent. See Sharon Alice Pouzar, Comment, Frequent Flyer Awards as Taxable Income: Time to Pay the Tax Man, 5 TEX. WESLEYAN L. REV. 55, 60-62 (1998) (noting that viewing rewards as untaxable income "is simplistic and fails to acknowledge . . . the full scope of the Sixteenth Amendment").

139 See Sheri Wight, Not So Rewarding: The Tax Implications For Bank Rewards Points in the Loyalty Industry After Shankar v. Commissioner, 21 NEXUS: CHAP. J.L. & POL'Y 91, 92 (2016) (discussing the sheer scope and size of the loyalty program industry). Membership in credit card rewards programs has "skyrocketed" in recent years and there are "hundreds of millions" of individuals who participate in this sector. Id. Arguably most important (regardless of whether the IRS deems credit card rewards taxable or not) is the need for a clear decision as to whether credit card rewards constitute taxable income. See id. (noting the importance of settling "the inevitable taxpayer confusion").

140 See Rev. Rul. 76-96, 1976-1 C.B. 23 (noting that purchase incentives are simply untaxed deductions in the purchase price and the customer's basis in the purchased item is the price after rebate). Revenue Ruling 76-96 has been frequently cited in cases that consider credit card rewards issues; however, there exists a stark distinction between the redemption of rewards points for an airline ticket and the "dickering down of a price of a good or service." See Cunningham, supra note 137, at 306 (discussing the incompatibility of Revenue Ruling 76-96 with credit card rewards accrued via personal travel). In a redemption for points, there is no "arms-length" negotiation for a good or service; rather, the airline or card company sets the price, attaching a specific value to the reward for the "day, hour, and minute that [it is] purchased[,]"and then gives the consumer the option (with no guarantees) to redeem for the item if they have enough reward points. Id. Furthermore, the customer is only allowed to use the benefits "at the pleasure of the airline" or credit card company. Id.; see also Ben Gran, One Big Frightening Reason to Redeem Credit Card Points Faster, THE ASCENT, https://www. fool.com/the-ascent/credit-cards/articles/one-big-frightening-reason-to-redeem-credit-card-pointsfaster/ [https://perma.cc/E54A-NLJZ] (Oct. 15, 2024) (noting that credit card companies, airlines, and hotels frequently devalue their proprietary points over time). A report from the CFPB in May 2024 noted that customers reported points devaluation as one of their largest frustrations with the industry. Gran, supra. Unlike the example of a purchase of an automobile, where a consumer has the option to negotiate and drive down the price with the seller, in a redemption of rewards scenario, the transaction is "entirely contingent on whether" the consumer can redeem enough rewards for the good or service. Cunningham, supra note 137, at 306. Thus, it is not appropriate to classify a redemption of rewards as a bartered for and negotiated price; rather, the term "windfall" is likely more apt. Id. Also absent in the redemption of credit card rewards is any attempt on the part of the consumer to obtain the "true economic value of the good or service." Id.

141 See Shankar, 143 T.C. at 148 (finding that the use of Citi Thank You points received as a free reward on a ticket was includable in gross income). Banks are sporadic in their issuance of Form 1099s to account for this income, but current guidance does suggest the reporting of this income to the IRS; however, this runs into immediate valuation concerns. See Thompson & Dong, supra note 130 (discussing the taxability of credit card rewards).

142 See Davis, supra note 130, at 813 (noting the reluctance of the IRS and the Tax Court "to uphold and enforce these benefits as taxable"). This Note readily accepts the valuation, timing, and administrative issues inherent in the discussion of credit cards rewards taxation. See id. at 814 (discussing the issues inherent in an effort to tax credit card rewards). Yet, this Note also recognizes the ability for credit card companies to attach values to the rewards-currencies they use-suggesting that the ability to value rewards and points is present in the private sector. See Shankar, 143 T.C. at 142 (noting that Citibank easily classified 50,000 Citi points as being worth $668 on their issued Form 1099-MISC).

143 See Davis, supra note 130, at 814 (discussing how the IRS and the Tax Court have continually deferred to the other in hopes of regulatory action).

144 Compare I.R.S. Announcement 2002-18 C.B. 621 ("Consistent with prior practice, the IRS will not assert that any taxpayer has understated his federal tax liability by reason of the receipt or personal use of frequent flyer miles or other in-kind promotional benefits attributable to the taxpayer's business or official travel."), with Charley v. Comm'r, 91 F.3d 72, 74 (9th Cir. 1996) (holding that points received accrued via business expenses and then used for personal uses did constitute taxable income). In Charley, although the Ninth Circuit's ruling implied that such redemptions were taxable, the court merely punted the question back to the IRS for further discussion. See Davis, supra note 130, at 813 (noting that the court "elected to passively punt to the IRS to enforce this finding and mandate that these benefits be included in taxpayers' gross income"); see also Charley, 91 F.3d at 75 (placing the ball back into the IRS's court by saying that: "There is no showing that conventional personal use of frequent flyer miles in the late 1980s gave rise to taxable income under then-current IRS policy"). Importantly, the IRS's Special Announcement from 2002 limited Charley's holding to its specific facts-further adding confusion to the enforcement policies surrounding the taxation of credit card rewards. Davis, supra note 130, at 813, n.34.

145 See Wight, supra note 139, at 98 (noting that in issuing the 2002 announcement the "IRS reserved the right to tax these types of benefits in the future").

146 See Shankar, 143 T.C. at 148 n.2 ("Neither party has addressed, nor do we consider, whether award of the thank you points, itself, may have been the taxable event."); see also Anikeev v. Comm'r, T.C. Memo 2021-23, at ·17-22 (holding that Visa giftcards purchased using rewards points were not taxable income, but that money orders purchased using rewards points were income). The court in Anikeev also made clear that its holding was "based on the unique circumstances of this case." T.C. Memo. 2021-23 at ·8. Perhaps to its credit, the Tax Court's avoidance has been deemed a reluctance to engage in "judicial activism" with the court instead looking for a legislative body or the IRS to create hard and fast rules. See Davis, supra note 130, at 829 (discussing the Tax Court's potential strategy behind its rulings).

147 See Wight, supra note 139, at 98 (discussing the repeated reasons for the agency's "nonenforcement policy"); see also Davis, supra note 130, at 814 (noting the "valuation, timing, and administrative difficulties associated with taxing" rewards). The administrative difficulties of implementing an effective taxing scheme is one of the largest roadblocks to its implementation. Davis, supra note 130, at 814. The twin burdens of "valuing the rewards and of determining the appropriate timing of when to tax these rewards" are of particular concern. Id. Yet, both the IRS and the U.S. Department of the Treasury (Treasury) have the expertise, "resources[,] and time to craftbetter regulation and revenue rulings." Id. at 830. Given the greater resources at their disposal, the burden should be on the IRS and the Treasury-not the Tax Court which is only "provided evidence specific to individual cases at a time[,]" as opposed to viewing the issue through a wider, more nuanced lens. Id.

148 See Sara Rathner, Benefits of the Chase Sapphire Preferred, NERDWALLET, https://www. nerdwallet.com/article/credit-cards/benefits-chase-sapphire-preferred [https://perma.cc/LZG3-W4JN] (Oct. 18, 2024) (describing the plethora of benefits that go along with carrying a specific card). Long gone are the days of a simple "$1 dollar spent, 1 mile earned," formulation for credit cards; now, these pieces of plastic are sophisticated societal and economic tools that provide cardholders with benefits far beyond the occasional free flight. See Sara Rathner, Guide to Combining Credit Card Points, NERDWALLET, https://www.nerdwallet.com/article/credit-cards/guide-to-combining-credit-card-points [https://perma.cc/74M7-MVXG] (Sept. 25, 2024) (discussing the complicated processes behind creating an effective wallet of different credit cards). Cards now come with baggage insurance, travel assistance, rental car coverage, and "point boosts" when using rewards for specific items. Rathner & Mims, supra note 148. The credit card industry is also a profit machine and has recently recovered any lost ground attributable to the Covid-19 pandemic. See Press Release, CFBP Report Finds Credit Card Companies Charged Consumers Record-High $130 Million in Interest and Fees in 2022, CFPB (Oct. 25, 2023), https://www.consumerfinance.gov/about-us/newsroom/cfpb-report-finds-credit-cardcompaniescharged-consumers-record-high-130-billion-in-interest-and-fees-in-2022/ [https://perma. cc/37D4-67GB] (discussing the broad profits recorded by credit card companies post-pandemic). As an indicator, in 2022, credit card companies charged consumers a record $130 billion in interest and fees-the "highest amount of interest and fees ever recorded by the CFPB's data." Id.

149 See Oliveira, supra note 137, at 643 (noting the apparent "surprising" nature of the IRS's and the Tax Court's "inaction" on this issue). The IRS is renowned for "tax[ing] everything within its powers"-again, suggesting an odd dichotomy with the lack of taxation of credit card rewards. Id.

150 Pouzar, supra note 138, at 71. Commentators have frequently noted that the "reticence on the part of the [IRS]" in the arena of taxing credit card rewards is "uncharacteristic." Id. at 72. Oddly, the IRS has "always maintained that the redemption and use of frequent flyer benefits may lead to gross income." Id.

151 See Wight, supra note 139, at 92-93 (discussing the bizarre lack of strict enforcement policies from the IRS). The IRS's reticence to wade into this issue flies directly in the face of the broad definition that the courts and the agencies of the federal government have given to the term "income." See supra notes 134-139 (explaining that the statutory and judicial definition of "income" is broad).

152 See supra notes 134-149 and accompanying text (noting that these excuses range from the professed necessity of issuing narrow rulings to the frequent noting of administrative difficulties).

153 See Davis, supra note 130, at 814 (noting the reasoning behind the IRS's intransigence with taxing credit card rewards). The IRS has frequently noted and acknowledged the "technical and administrative issue" relevant to the taxation of credit card rewards, and they have cited these reasons in their statements as to why they have "not pursued a tax enforcement program." I.R.S. Announcement 2002-18 C.B. 621.

154 See Oliveira, supra note 137, at 651 (acknowledging the valuation issues with taxing credit card rewards). Commentators have suggested several paths forward to determining valuation. See id. (discussing the "three most commonly discussed possibilities" as to whom to place the onus on for determining valuation of the transaction).

155 See Davis, supra note 130, at 830 (making the point that the IRS and Treasury have the expertise, "resources[,] and time to craftbetter regulation and revenue rulings" to effectuate proper taxation.). The ideas for valuation range from using the fair market value of each good or service redeemed (e.g., based offcalculations such as the "difference between a first class ticket and a coach . . . ticket") and adding that difference to one's gross income, to having airlines or other companies publicly acknowledge and publish how they "attach value" to reward offerings. See Pouzar, supra note 138, at 72-77 (discussing different approaches to valuation); see also Oliveira, supra note 137, at 650-63 (providing additional critiques of valuation methods). In deciding a case where a defendant appealed his conviction for wire fraud in relation to a plan to defraud American Airlines, the U.S. Court of Appeals for the 5th Circuit affirmed the necessity to impute real value on these transactions and noted that: "There is no question that a flight reward coupon is 'something of value'"-again providing support for the necessity to include such rewards as income. United States v. Loney, 959 F.2d 1332, 1336 (5th Cir. 1992). In terms of "accessibility to information" one of the "most practical" valuation methods would be to permit airlines, banks, or credit card companies to assign values to rewards redemptions and then report taxable income to consumers; however, this would require additional oversight to ensure gross underreporting (on the part of the aforementioned companies) did not occur. See Kathryn Symmes Hall, Frequent Flyer Benefits: Substantive and Procedural Tax Consequences, 20 IND. L. REV. 823, 854 (1987). Many firms are already in possession of consumers' financial data and possess the ability to easily assign values to rewards. See id. (discussing the records that many private companies already maintain for customers' data).

156 See Telis Demos, Credit Card Rewards Are Heading Toward a Crisis, WALL ST. J. (Apr. 7, 2023), https://www.wsj.com/articles/the-pandemic-didnt-end-card-rewards-it-made-them-stronger- 20fd03c9 [https://perma.cc/XTE4-GZHV] (discussing the rapid growth, prevalence, and consumer preference toward credit card rewards). The post-COVID exponential rise of credit card rewards has worked almost "too well" for the "biggest card-issuing banks." Id. Credit cards are "one of the bestperforming businesses in financial services, with a return on assets of 3.6 percent in 2020." Amit Garg, Diana Goldshtein, Udai Kaura & Roshan Varadarajan, Reinventing Credit Cards: Responses to New Lending Models in the US, MCKINSEY & CO. (June 23, 2022), https://www.mckinsey.com/industries/ financial-services/our-insights/reinventing-credit-cards-responses-to-new-lending-models-in-the-us [https://perma.cc/7HAD-78K7].

157 See Davis, supra note 130, at 815 (noting that recent Tax Court decisions have suggested a shiftin holding some rewards to be taxable); see also Wight, supra note 139, at 98 (noting that in issuing the key 2002 announcement the "IRS reserved the right to tax these types of benefits in the future").

158 See Davis, supra note 130, at 816 (noting that the recent Tax Court decision in Anikeev v. Commissioner offers some context into the court's views on taxing credit card rewards); see also Anikeev v. Comm'r, T.C. Memo 2021-23, at ·13 (discussing the prevailing wisdom and past rulings on the taxation of rewards).

159 Shankar v. Comm'r, 143 T.C. 140, 147-48 (2014) (finding that the ticket redeemed using credit card rewards was taxable).

160 See id. at 148 ("In general, the receipt of interest constitutes receipt of an item of gross income."). The court found that the reward was "something in the nature of interest[,]" leading them to find it includable in the taxpayer's income. Id. Although some commentators have stressed the unique facts present in Shankar (primarily that Citibank was the "first of its peers" to issue a Form 1099-MISC to taxpayers in such a case), the case's holding still exhibited a shiftin the court's stance on rewards-suggesting a potential appetite for further review. See Davis, supra note 130, at 815 (discussing the repercussions post-Shankar).

161 See Davis, supra note 130, at 816 (discussing the future implications of the holding from Shankar).

162 See Anikeev, T.C. Memo. 2021-23, at ·21-22 (discussing the bifurcated nature of the holding).

163 See Davis, supra note 130, at 818-20 (discussing the method used by the taxpayers in Anikeev). The court focused its analysis on the fact that the money orders offered no other "product or service"; rather, they were simply a cash equivalent that was subject to no further price adjustmentas opposed to a product that could be "subject to a price adjustment." See Anikeev, T.C. Memo. 2021- 23, at ·21 (noting the reasoning behind the differentiation).

164 See Anikeev, T.C. Memo. 2021-23 at ·21 ("In conclusion, we hold that the Reward Dollars associated with the Visa giftcard purchases were not properly included in income.").

165 See id. (discussing the difference in reasoning between the bifurcated holding); see also Davis, supra note 130, at 820 (discussing the reasoning behind holding that the purchase of Visa giftcards, that were then used to purchase money orders, was not a taxable event). The court found that this "intermediate step" of purchasing "Visa debit and giftcards" that were then used to buy money orders credited to their account balance was sufficient to remove the accumulated rewards from taxation because the rewards were gained using a product that was "sufficiently different from that of money orders." Id. The court found that the Visa cards had sufficient "product characteristics" and were unlike money orders because they were not redeemable for cash. Anikeev, T.C. Memo. 2021-23, at ·21.

166 See Anikeev, T.C. Memo. 2021-23 at ·22 ("These holdings are based on the unique circumstances of this case."). In dicta, the Tax Court also opined that it hoped that taxpayers would "[police] the IRS policy in the future in regulation or public pronouncements rather than relying on piecemeal litigation"-again, offering a signal from the courts to the IRS, to come down more forcefully in its regulation of credit card rewards. Id.

167 See Comm'r v. Banks, 543 U.S. 426, 433 (2005) ("The definition extends broadly to all economic gains not otherwise exempted."). Section 61 of the IRC is given a "sweeping scope" whose purpose is "to include as taxable income 'any economic or financial benefit'" absent an exemption. Rudolph v. United States, 370 U.S. 269, 273 (1962) (quoting Comm'r v. Smith, 324 U.S. 177, 181 (1945)). The concept of income is offered a "broad definition" by the Tax Court as well. Worsham v. Comm'r, 104 T.C.M. (CCH) 129, ·3 (2019); see also Matula v. Comm'r, 40 T.C. 914, 919 (1963) (finding that the "payment of fines" by a corporation on behalf of a corporate officer constituted income within the scope of its "broad definition").

168 Marjorie E. Kornhauser, The Constitutional Meaning of Income and the Income Taxation of Gifts, 25 CONN. L. REV. 1, 24 (1992). A broad interpretation of the term "gross income" implies that a "proper" reading of the Sixteenth Amendment "must give Congress a fully vested power to tax all income." Id. Congress's plenary power in the realm of taxation implies a definition of income that is both "broad and evolutionary." Id. If the definition of "income" is seen through this lens, it must then adapt and change over time and modulate to new sophisticated "conceptions of income"-such as the world of credit card rewards. Id. This Note advocates for a broad interpretation of the concept of income as defined in Glenshaw Glass and expounded in myriad cases and rulings. See supra notes 134- 139 (noting that the statutory and judicial definition of "income" is broad); see also Davis, supra note 130, at 828 (noting that the court in Anikeev failed to achieve a "strict statutory interpretation" reading of gross income). The holding in Glenshaw Glass continues to sum up this argument best, noting that "the Court has given a liberal construction to this broad phraseology in recognition of the intention of Congress to tax all gains except this specifically exempted." 348 U.S. 426, 430 (1955).

169 See Kornhauser, supra note 168, at 26 (describing that the "Code as a whole aspires to reach the goals of horizontal equity and the distribution of taxes according to ability to pay"). The entire history of the federal income tax can be seen as an attempt to ensure that those of different abilities to pay are treated fairly. See EDWARD R.A. SELIGMAN, ESSAYS IN TAXATION 21 (1895) ("The history of finance . . . shows the evolution of the principle of faculty or ability in taxation-the principle that each individual should be held to help the state in proportion to his ability to help himself."); see also 50 Cong. Rec. 504 (1913) (statement of Sen. Cordell Hull) ("The experience of all countries with respect to every form of taxation has resulted in the universal conclusion that the fairest and most just of all taxes is that which is levied upon the citizen according to ability to pay, and that this result can best be accomplished by imposing a tax on net incomes.").

170 See Compania General de Tabacos de Flilipinas v. Collector, 275 U.S. 87, 100 (1927) (Holmes, J., dissenting) ("Taxes are what we pay for civilized society . . . ."). This famous quote from Justice Oliver Wendell Holmes underscores the central reasoning behind an income tax system that takes into account income in all its forms. See DANIEL L. SIMMONS, MARTIN J. MCMAHON JR., BRADLEY T. BORDEN & BRET WELLS, FEDERAL INCOME TAXATION 4 (8th ed. 2020) (discussing the goals of federal income taxation policy). Policymakers often refer to the concepts of vertical and horizontal equity as key components in the making of tax policy decisions, and these ideas play a significant role in "designing a tax system and crafting tax legislation." Id. at 5. Combined, these concepts work to ensure that "similarly situated" taxpayers should pay the same amount of tax and "differently situated" taxpayers "should bear different tax burdens." Id. As described above, the current lack of a taxing scheme for credit card rewards violates the principles of both horizontal and vertical equity in its tacit approval of a massively unequal upward wealth transfer where those who can pay more pay less and those in the same socioeconomic bracket are treated differently by a system that is anything but colorblind. See Demos, supra note 156 ("[R]ewards cards drove a $15 billion annualized 'redistribution' from low [credit]-score to high [credit]-score consumers."); see also Freeman, supra note 38, at 1074 (describing the "ubiquitous racism" in the credit card industry); supra notes 25-26 and accompanying text (discussing the upward wealth transfer caused by credit card rewards).

171 See Pouzar, supra note 138, at 57 (noting that a lack of IRS guidance in this area "contributes to a distortion in the labor market and a general distrust of the taxing authorities"); see also Worsham, 104 T.C.M. at ·5 (noting the "broad definition" afforded to the term income). See generally supra notes 86-99 and accompanying text (explaining how credit card rewards are engines of inequality). Tax law commentators have called upon the IRS to offer guidance and "to ensure that justice is served" in the context of credit card rewards. See Davis, supra note 130, at 830 ("[T]he IRS should provide" clarity in this area.").

172 See Pouzar, supra note 138, at 56 (noting the inequities present in the current lack of a taxing scheme).

173 See Turner, supra note 92, at 9 (noting that seventy-nine percent of people with credit cards in 2012 had a rewards-based credit card); see also Semeraro, supra note 88, at 435 (positing that noncard users are better offwhen merchants accept all cards regardless of their supposed tier). Many media outlets and social media influencers preach the gospel of the credit card, and more and more individuals see these cards as ways in which to easily access the good life. See Virginia C. Maguire & Paul Soucy, Why Nearly Every Purchase Should Be on a Credit Card, NERDWALLET, https://www.nerdwallet.com/article/credit-cards/why-every-purchase-should-be-on-a-credit-card [https://perma.cc/FK3K-WGT5] (Oct. 28, 2024) (discussing the reasoning behind using credit cards for all purchases); see also Daily Drop, How We Used 500k Points to Take a 3 Month Honeymoon, YOUTUBE (July 1, 2023), https://www.youtube.com/watch?v=2FFJ_F4rjXk [https://perma.cc/X9H9- ABT4] (offering a window into the supposed luxurious life one can lead if one only uses a credit card).

174 See infra notes 178-197 and accompanying text.

175 See infra notes 198-217 and accompanying text.

176 See infra notes 218-229 and accompanying text.

177 See infra notes 230-240 and accompanying text.

178 See supra notes 100-124 and accompanying text (discussing the details and repercussions of various credit card regulatory efforts).

179 Matthew A. Edwards, Empirical and Behavioral Critiques of Mandatory Disclosure: Socio- Economics and the Quest for Truth in Lending, 14 CORNELL J.L. & PUB. POL'Y 200, 200 (2005).

180 See Wallace, supra note 42, at 978 (discussing the benefits that can flow from a tax that is "competently formulated and administered"). Paying taxes is "unique" in American democracy in that it is "required of almost everyone"-unlike the optional participating in voting, town meetings, engaging in discussions with neighbors, etc. See id. at 979 (noting how the paying of taxes plays a key role in American democracy). The tax system must also be used to "help control wealth concentration[,]" which, when correctly formulated, can help to "combat slow productivity growth because of the lack of opportunities for the poor" and work to ensure that the excessive political power is not exclusively given to the wealthy. James R. Repetti, Democracy, Taxes, and Wealth, 76 N.Y.U. L. REV. 825, 873 (2001). Although the taxation of credit card rewards is just one piece in a wider puzzle, it could arguably help "curb upwardly spiraling wealth concentration" through taxing the vicious cycle that is the documented upward transfer of wealth via credit card rewards. Id.

181 See supra notes 100-124 and accompanying text (describing the disclosure-heavy approach used by Congress).

182 See Tsosie, supra note 66 (noting the beneficial impacts of the TILA).

183 See Peterson, supra note 61, at 814-15 (discussing current critiques of TILA). Commentators have noted that the credit card industry uses some of the TILA's "meaningless disclosure rules to deflect legislative pressure for more substantive consumer protections." Id. at 815.

184 See id. at 903 ("[C]onsumer advocates must recast the goal of disclosure law as aiming not merely to truthfully describe contracts, but as aiming to create practical contractual understanding on the part of vulnerable debtors."). Some critics worry whether the TILA's disclosure requirements work at all and question whether it has achieved its stated "purpose of reducing information asymmetries."

185 See John H. Matheson, The Equal Credit Opportunity Act: A Functional Failure, 21 HARV. J. ON LEGIS. 371, 376-77 (1984) (discussing issues with the ECOA). Although the ECOA was amended shortly after its passage to include more forceful enforcement provisions, in the years directly following this change "only a few public enforcement actions and a trickle of litigation [occurred]." Id. at 377. It appears that Congress imagined that "private actions" would "provide the bulwark of enforcement for violations of the ECOA"; however, the intervening years have not seen any sort of watershed moment of litigation. Id.

186 Freeman, supra note 38, at 1121. This dearth of successful claims "suggests that the substance or procedure of the law may be tipped in defendants' [credit card companies] favor, and analysis of how these cases often proceed in court bear out this suspicion." Id. at 1122.

187 See id. at 1127 (noting that the ECOA is "inadequate" to effectuate meaningful change). These infrequent settlements are not sufficient in rectifying or remedying the negative impacts of the "unfair interest rates and fees" that are imposed on minority cardholders. Id. One of the key issues in the ECOA's framework is that plaintiffs "need race data to prove racial discrimination claims[,]" but sources of this data are "largely unavailable" in non-home mortgage contexts. See Winnie Taylor, Proving Racial Discrimination and Monitoring Fair Lending Compliance: The Missing Data Problem in Nonmortgage Credit, 31 REV. BANKING & FIN. L. 199, 201 (2011) (discussing the shortcomings present in the ECOA). Regulators under the ECOA are thus unable to "systematically identify and scrutinize nonmortgage lenders who may discriminate on the basis of race." Id. at 205.

188 See supra notes 110-111 (describing the overarching goals of the FDCPA).

189 See Bremner, supra note 111, at 1555 (discussing that the "fundamental flaw" of the FDCPA is that it does not "punish debt collection abuses in proportion to the actual harm they do to consumers"). In the aftermath of the global financial crisis of the mid-2000s, an industry of third-party debt collectors arose and used "increasingly aggressive debt collection [tactics]" toward consumers to secure repayments of debt. Id. The Court's decision in Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA identified that the key issue in the FDCPA's shortcoming was that it punished those who committed "severe consumer abuses" and those who committed "technical violations" in the same manner. 559 U.S. 573 (2015); see also Bremner, supra note 111, at 1555 (noting this takeaway from the holding in Jerman). In the FDCPA, the algebra of deterrence is not equalized in such a way as to "eliminate the offenders' profit motives through private enforcement." Bremner, supra note 111, at 1556. Some posit that they way to fix these acts is to give regulators the enforcement power to "fundamentally reshape" the debt collection industry by making prospective punishment outweigh any profit motive from potential offenders. See id. (discussing ways to give the FDCPA and make it an "effective vanguard of consumer protection").

190 See supra notes 112-124 (discussing both pieces of legislation's unintended consequences).

191 See Rodriguez, supra note 113, at 322 (noting that the passage of credit card regulations has negative economic effects on credit card companies that they then pass on to consumers).

192 See Credit Card Competition Act of 2023, S. 1838, 188th Cong. (2023) (mandating that card issuers offer a third payment processing option outside of the two largest processing platforms (as defined by the CCCA)).

193 See Dashia Milden, The Credit Card Competition Act Is Back on the Table. Here's What to Know, CNET, https://www.cnet.com/personal-finance/credit-cards/advice/credit-card-competition-act/ [https://perma.cc/RNV5-4LJN] (July 22, 2023) (providing a broad overview of the contents of the CCCA). Importantly, the bill would require that banks and credit card issuers choose a processor that is "outside of the two largest networks, meaning they could choose Visa or Mastercard, but not both." Id. This would then hopefully lower "swipe fees across the credit card industry" and enable smaller businesses more flexibility in their pricing. Id. Although the bill could assist smaller businesses in retaining more of the money they would otherwise have spent on interchange fees, there is also no guarantee that these savings would be passed on to consumers; rather, without more added language, the bill might not ever help the consumers it claims to assist. See id. (noting that the bill's passage might simply "pad retailers' bottom lines").

194 See Claire Grant, Durbin Meets with Springfield Businesses About Proposal Aimed at Curbing Credit Card Fees, STATE JOURNAL-REGISTER, https://www.sj-r.com/story/business/2024/01/ 29/durbin-outlines-credit-card-competition-act-to-springfield-businesses/72397272007/ [https://perma. cc/99UY-44L7] (Jan. 29, 2024) (outlining how Senator Durbin has focused his rhetoric in support of the CCCA in the way it will allegedly help average consumers and small businesses); see also Lynne Marek, Credit Card Bill Battle May Slide into 2024, PAYMENTS DIVE (Nov. 27, 2023), https://www. paymentsdive.com/news/credit-card-competition-bill-legislation-battle-durbin-marshall-unions/ 700713/ [https://perma.cc/NVD5-UU6S] (discussing how Senators Durbin and Marshall have focused much of their rhetoric on how the bill will help consumers across the United States).

195 See Turner, supra note 92, at 11 (noting that eighty-three percent of consumers oppose regulations on credit card rewards even if it means higher prices at the register). Absent from this discussion is a full realization of just how much the average American consumer enjoys and values their credit card rewards programs. Id. This data suggests that even "lower-income credit card users do not feel that issuers are taking advantage of them." Id. A high number of Americans carry rewards-based credit cards-seventy percent of consumers who make $20,000 or less a year carry a rewards-based credit card. Id. at 9. Data suggest that consumers who carry rewards-based cards have "high participation, high spending, and high satisfaction"-further suggesting that these pieces of plastic and metal occupy a unique position in the American economy. Id. at 11. Furthermore, merchants themselves also highly value credit card rewards systems with half saying that "accepting rewards cards brought in more sales." Id.

196 See supra notes 112-124 and accompanying text (discussing the negative repercussions on consumers after the passage of the CARD Act and the Durbin Amendment).

197 See infra notes 198-217 and accompanying text.

198 I.R.C. § 61(a)(11). "Consequently, if a taxpayer pays offa debt at less than its face amount, the canceled portion constitutes income because it makes available assets previously offset by liabilities." Michaels v. Comm'r, 87 T.C. 1412, 1414 (1986). There must be an explicit "statutory or judicial exception" to avoid recognition of cancellation of indebtedness income. Id.

199 See Comm'r v. Glenshaw Glass Co., 348 U.S. 426, 431 (1955) ("Here we have instances of undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion."). The origins of the inclusion of cancellation of indebtedness in gross income have their roots in decisions from the judiciary, but this concept is now fully codified in the IRC. See SIMMONS ET AL., supra note 170, at 343. Nevertheless, the courts have consistently had difficulty applying this concept. Id.

200 See generally I.R.C. § 108 (listing the exceptions to the general rule that cancellation of indebtedness constitutes income).

201 See Michaels, 87 T.C. at 1414 (noting that absent a "statutory or judicial exception" a taxpayer must include "the amount of the discount" as income "in the year the debt is canceled").

202 See I.R.C. § 108(e)(5) (codifying the exception of cancellation of indebtedness income that is attributable to a purchase of property). Although now part of the IRC, this concept arose from judicial doctrine. See SIMMONS ET AL., supra note 170, at 352-53 (discussing the origins of the doctrine). The codification of the principle arose out of a desire to clear up confusion between the IRS and taxpayers over whether situations would constitute untaxable purchase price reductions or valid recognitions of cancellation of indebtedness income. Id. at 353.

203 See SIMMONS ET AL., supra note 170, at 353 (discussing the legislative history behind the section's inclusion in the Code). "The purchase price reduction provision is limited to debt relief negotiated between the buyer and seller of property." Id.; see also I.R.C. § 108(e)(5) (noting that the exception applies if "the debt of a purchaser of property to the seller of such property which arose out of the purchase of such property is reduced"). In Michaels, the Tax Court held that a taxpayer had recognized cancellation of indebtedness income when they prepaid a discount on a mortgage to a third party lender (not someone in the buyer-cum-seller relationship). 87 T.C. at 1417. The courts have "consistently held that relief from the recognition of the cancellation of debt income is limited to negotiations between the buyer and the seller who holds the debt instrument." SIMMONS ET AL., supra note 170, at 353. In Preslar v. Commissioner, the U.S. Court of Appeals for the Tenth Circuit reaffirmed this concept in holding that Section 108(e)(5) applied "only to direct agreements between a purchaser and seller." 167 F.3d 1323, 1331 (10th Cir. 1999). The court further noted: "If the debt has been transferred by the seller to a third party (whether or not related to the seller), or if the property has been transferred by the buyer to a third party (whether or not related to the buyer)," the purchase price reduction exception is not available and normal discharge-of-indebtedness rules control. Id. (quoting S. REP. NO. 96-1035, at 16 (1980), reprinted in 1980 U.S.C.C.A.N. 7017, 7031).

204 See Rev. Rul. 92-99, 1992-2 C.B. 35 (reaffirming the reasoning that third parties who agree to reduce debt are not covered by the exemption). This revenue ruling makes it clear that the reason why the exemption is inapplicable is because "the seller has [already] received the entire purchase price from the purchase and is not a party to the [new] debt reduction agreement" between the purchaser and the third party. Id. An agreement "between a purchaser and a third-party lender is not a true adjustment of the purchase price paid for the property." Id.

205 See Meredith Hoffman & Seychelle Thomas, What Is a Credit Card?, BANKRATE (Sept. 4, 2024), https://www.bankrate.com/finance/credit-cards/what-is-a-credit-card/ [https://perma.cc/AL9VL547] (discussing the basic mechanics of credit cards and the fact that they are "essentially a loan" that consumers can continue to use).

206 See Lake, supra note 77 (describing the transaction process after a credit card is swiped).

207 See generally I.R.C. § 108 (showing that a simple cancellation of credit card debt does not fall within any of the stated exceptions).

208 See Lake, supra note 77 (noting the mechanics that occur when a card is swiped, tapped, or processed). When a card is used, the card details are first sent to the retailer's bank; this bank then gets authorization to process the transaction from the consumer's credit card network (i.e., Visa, Mastercard, Amex, etc.) to process the transaction. Id. The consumer's card issuer then verifies their information to "either approve or decline the transaction." Id. If payment is approved, the money is sent to the merchant and the "card's available credit is reduced by the transaction amount." Id.

209 See Rev. Rul. 92-99 (noting that third party reductions of debt are not covered by the exemption in Section 108(e)(5)).

210 See supra notes 198-204 and accompanying text (discussing the strict interpretation of Section 108(e)(5)).

211 See generally I.R.C. § 108 (showing that there is no explicit exemption for the cancellation of indebtedness income for such a transaction). Although the consumer must still pay the balance on their card at the end of the billing period or risk accruing interest, the rewards they redeem can be characterized as cancellation of indebtedness income as they are monetary items offered by a third party that (whenever they are cashed in or redeemed) reduce the amount of money the consumer otherwise would have spent on a transaction/vacation/etc. See Important Information Regarding Rates, Fees, and Other Cost Information, AMERICAN EXPRESS, https://www.americanexpress.com/us/credit cards/ card-application/apply/prospect/terms/platinum-card/59002-10-0#offer-terms [https://perma. cc/77NJ-4LAN] (showing how points can be redeemed to cover statement credit and for a multitude of other purchases).

212 See Geller & Kemmis, supra note 24 (noting the ways a consumer can redeem their points for a variety of different purchases).

213 See I.R.C. § 108(e)(5) (stating that the purchase price reduction exists when the "debt of a purchaser of property to the seller of such property . . . is reduced"). In a transaction where a credit card with rewards is utilized, the seller (the retailer or merchant) has not seen any reduction in the price-that reduction is only felt by the purchaser when they redeem their rewards in the future. But see id. (stating the clear rule for when this exemption is permitted).

214 See Preslar v. Comm'r, 167 F.3d 1323, 1331 (10th Cir. 1999) (holding that the purchase price reduction exemption is only applicable in instances between a buyer and a seller).

215 See Davis, supra note 130, at 814 (discussing the valuation issues with taxing credit card rewards).

216 See Rebecca Lake, Credit Card Points and Miles Values, INVESTOPEDIA, https://www. investopedia.com/what-are-credit-card-points-and-miles-worth-5203918 [https://perma.cc/A9TQGDV8] (Apr. 25, 2022) (noting that most credit card points are "valued at 1 cent each"). See generally Brian Kelly, Ben Smithson & Nick Ewen, What Are Points and Miles Worth? TPG's November 2024 Monthly Valuations, THE POINTS GUY (Nov. 3, 2024), https://thepointsguy.com/loyalty-programs/ monthly-valuations/ [https://perma.cc/65CU-FNVF] (offering the proprietary valuation data from TPG's editorial team). Most credit card companies that offer rewards cards already offer an option to simply redeem points as a simple cash statement put toward their bill-instead of the more lucrative redemption for travel. See What Are the Best Ways to Use Chase Points?, CHASE (2024), https:// www.chase.com/personal/credit-cards/education/rewards-benefits/best-way-chase-points#:~:text= Apply%20them%20to%20your%20bill,of%20one%20cent%20per%20point [https://perma.cc/6QEZAA97] (noting that you can use points for a cash statement credit); see also Cover It with Points: Use Points for Purchases, AMERICAN EXPRESS (2024), https://www.americanexpress.com/en-ca/rewards/ membership-rewards/agency/Membership-Rewards/Use-Points-for-Purchases/TRIP [https://perma. cc/8J7Z-Y72W] (noting that membership points can be redeemed for a cash statement credit).

217 See Pouzar, supra note 138, at 56 (noting that even a "cursory reading of the current Internal Revenue Code" suggests that some rewards transactions should be treated as income). In a Private Letter Ruling from 1993, the IRS did acknowledge that "[t]here are situations in which a passenger who receives benefits under B's [airline rewards] Program will realize gross income." I.R.S. Priv. Ltr. Rul. 93-40-007 (Oct. 8, 1993). This ruling noted that when an employee gained a benefit via a rewards program from business travel in the form of a cash payment (i.e., a statement credit) whose original source was due to business travel paid for by an employer, it constituted a non-deductible fringe benefit that had to be includable in income. Id. Further support for the taxability of credit card rewards accumulated via business purposes and then used for personal redemption comes from the United States Supreme Court's holding in Commissioner v. Smith, where the Court noted that the term gross income "is broad enough to include in taxable income any economic or financial benefit conferred on the employee as compensation, whatever the form or mode by which it is effected." 324 U.S. 177, 181 (1945).

218 See Pouzar, supra note 138, at 56 (noting the "loss of considerable tax revenue" with the IRS not taxing credit card rewards). Furthermore, by allowing these benefits to accrue only exponentially, the IRS has given individuals the false impression that these benefits are "nothing more than gifts from the airlines or 'perks' from employers." Id.

219 See Hall, supra note 155, at 824 n.12 (noting that, even in the early years of rewards programs almost $50 million a year was likely lost in potential tax revenue). This "reluctance to collect" on income generated via these business-related awards creates severe inequities between different working populations (e.g., those who travel for business and whose companies pay for their travel versus those who do not travel and are responsible for any of their own travel). Pouzar, supra note 138, at 56-57.

220 See Pouzar, supra note 138, at 56 (discussing the inherent inequities and issues with the IRS's current scheme). The IRS's stated mission is to "enforce the law with integrity and fairness to all." About IRS, IRS, https://www.irs.gov/about-irs [https://perma.cc/HP64-PBHN] (Aug. 20, 2024).

221 Daher, supra note 137, at 21.

222 Id.; Comm'r v. Glenshaw Glass Co., 348 U.S. 426, 431 (1955); see I.R.C. § 61(a)(1) (noting that gross income includes "compensation for services").

223 Daher, supra note 137, at 21; I.R.C. § 61(a)(1); I.R.C. § 132; Treas. Reg. § 1.61-21(a) (2020).

224 Charley v. Comm'r, 91 F.3d 72, 74 (9th Cir. 1996) (holding that points received accrued via business expenses and then used for personal uses did constitute taxable income).

225 Daher, supra note 137, at 7 (discussing the repercussions of the holding in Charley).

226 See I.R.C. § 1 (noting that the current income tax rate varies from 15% to 39.6%).

227 See Pouzar, supra note 138, at 56 (quoting J. MICHAEL BURKE & MICHAEL K. FRIEL, TAXATION OF INDIVIDUAL INCOME 201 (4th ed. 1997)) ("[T]he exemption [of credit card rewards from gross income] is of greater value to a high-income taxpayer than to a low-income taxpayer."). By exempting the value of credit card rewards accrued via business travel from gross income, the IRS is giving those individuals an unfair advantage and allows them to then purchase goods or services in the future with rewards that are more "than cash compensation of the same value." Pouzar, supra note 138, at 56. For example, consider if a taxpayer in the 39.6% income bracket purchases a ticket using rewards accrued from business travel that has a fair market value of $500. Id. For another individual to make the same purchase (assuming they are also in the same tax bracket) without the use of credit card rewards from business travel, they would have to "earn approximately $825 to purchase that same ticket." Id. at 56-57.

228 See Pouzar, supra note 138, at 56 (discussing the "salary inequities" created by the current taxing scheme).

229 See id. at 57 (discussing the repercussions of not pursuing an effective taxing scheme of credit card rewards accumulated via business travel). This lack of taxation is a "disservice both to the national treasury and to the taxpaying public." Id. at 56.

230 Federal Tax Law: A Beginner's Guide, LIBR. OF CONG., https://guides.loc.gov/tax-law# :~:text=%22Our%20new%20Constitution%20is%20now,%2DBaptiste%20Le%20Roy%2C%201789 [https://perma.cc/5AG2-S692] (Dec. 19, 2023).

231 See Adam Chodorow, Thank Your Taxes, SLATE (Apr. 17, 2017), https://slate.com/business/ 2017/04/taxes-gave-us-western-democracy-so-praise-them.html [https://perma.cc/S6YF-4U4A] (discussing how the idea and concepts behind proper taxation gave rise to American democracy). In arguably one of the watershed moments in the development of the United States, the Boston Tea Party represented a key marker in the development of the concept of taxation where colonists threw tea overboard in Boston Harbor to protest taxation without representation. See id. (discussing the debate over taxation's key importance to the nascent country). The power to tax being so deeply ingrained into the United States' own Constitution further suggests its key importance in the development of the country. See id. (describing that the concept of taxation plays a key role in American constitutional design). Justice Oliver Wendell Holmes went so far as to say that "[t]axes are what we pay for civilized society"-underlining their key role as the compact that binds and funds our society. Compania General De Tabacos De Filipinas v. Collector of Internal Revenues, 275 U.S. 87, 100 (1927) (Holmes, J., dissenting).

232 Diane Lim Rogers, Opinion, Good Reasons for Taxes, BROOKINGS INST. (Apr. 12, 2006), https://www.brookings.edu/articles/good-reasons-for-taxes/ [https://perma.cc/K5S4-FACY]. About "20 percent of the federal budget is spent on defense and security" with the large part of that percentage going directly to the U.S. Department of Defense. TurboTax Expert, Where Tax Dollars Are Spent, INTUIT TURBOTAX, https://turbotax.intuit.com/tax-tips/general/where-tax-dollars-are-spent/ L0CBBjj5M [https://perma.cc/CB7R-P7BZ] (Oct. 16, 2024). The rest of the money goes to many different places, including, but not limited to, health care, public assistance, veterans' assistance, and scientific and medical research. Id.

233 See The Investopedia Team, Is a Progressive Tax More Fair Than a Flat Tax?, INVESTOPEDIA, https://www.investopedia.com/ask/answers/042815/progressive-tax-more-fair-flat-tax.asp#:~: text=Argument%20for%20Progressive%20Taxes,tax%20burden%20of%20the%20poor [https://perma.cc/Z5XT-L6M8] (Dec. 20, 2023) (discussing the argument behind a progressive tax scheme).

234 Daryl J. Levinson, Foreword: Looking for Power in Public Law, 130 HARV. L. REV. 31, 140 (2016). In one example of how the tax system could be used to make a "significant difference[,]" some scholars have proposed that all employers across all states should be required to pay employees for time offfrom civic engagements (i.e., jury duty) and then allow a deduction from the employer's taxes to incentivize participation. See Kate Andrias & Benjamin I. Sachs, Constructing Countervailing Power: Law and Organizing in an Era of Political Inequality, 130 YALE L.J. 546, 612 (2021) (suggesting one way in which taxing could be used to help effectuate societal change). More beneficial tax credits could be offered as well, not just to corporations, but to people seeking to create "public spaces" to engender dialogue. Id. at 617. Taxing can also be used as a tool to rectify issues of problematic wealth accumulation in the coffers of just a few. See James R. Repetti, Should We Tax the Gratuitous Transfer of Wealth? An Introduction, 57 B.C. L. REV. 815, 815-16 (2016) (discussing the efforts to combat "dynastic wealth" in the genesis of the estate tax). Scholars have pointed out that the concentration of wealth in the hands of a few has "harmful effect[s] . . . on the democratic process." Id. Furthermore, data suggest that increased financial inequities lead to "significant adverse social consequences." Id. Examples of such adverse consequences can be seen in elected officials being more receptive to the largest donors where policy outcomes tend to be "more responsive to high-income voters where opinions of the wealthy and poor diverge." Id. Additionally, research suggests that increasing levels of economic inequality "drives down support for democracy at the individual level." Kai-Ping Huang, Support for Democracy in the Age of Rising Inequality and Population Aging, 166 SOC. INDICATORS RSCH. 27, 29 (2023).

235 See Lina M. Kahn, Amazon's Antitrust Paradox, 126 YALE L.J. 710, 750 n.204 (2017) (noting that preferential exemption from sales tax policies allowed Amazon to grow at an unheard-of pace). By being exempt from "sales tax for the first fifteen years of its existence[,]" Amazon was able to build a large advantage "over brick-and-mortar stores." Id.

236 Wallace, supra note 42, at 950.

237 See id. (remarking on tax law's ability to help the "future of democracy"). With tax law's inconspicuous focus on "economic difference[s,]" it is a realm of law and modality of thinking that is well-suited to confronting challenges of financial inequality head-on. Id.

238 See id. at 973 (discussing the "communicative" power of law).

239 See id. at 975 (noting how the current approach of not taxing credit card rewards communicates "messages and values that undermine faith in democracy"). TikTok and other social media platforms have become messengers of this perceived unfairness and videos lamenting the personal income tax filing requirement have been viewed tens of millions of times-further entrenching a distrust of the federal government in primarily the youth. See id. at 976 (describing a specific TikTok video that skewers the personal income tax filing system).

240 See supra notes 86-99 (documenting the fact that credit cards contribute to an upward transfer of wealth in the form of rewards). Tax laws can "communicate values such as respect and political equality that bolster support for democratic governance." Wallace, supra note 42, at 973.