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Oprah's Car Giveaway Not Quite "Free"

From the Chicago Sun Times:

Oprah called the show part of her "wildest dreams" season.

But for many of the 276 recipients of the new Pontiac cars that the talk-show queen gave away last week, there was a bit of reality to come with that dream -- they are going to have to fork over thousands of dollars in taxes.

It turns out that free car wasn't so free.

That's because while Pontiac agreed to pay for most of the local charges -- things like state sales tax and licensing fees -- the recipients have to report the cars as income once tax time comes.

By adding $28,500 to someone's income, it can push them into a higher tax bracket -- which means they will have to pay about 25 percent or more of the car's value in taxes. And for a nearly $30,000 car, that probably means, for most of the recipients, shelling out $7,125 for the "free car."

And if you live in Illinois, you can expect to tack on another 3 percent or so in state income taxes.

"It's not really a free car, it's more of a 75 percent off car," said Susan Nelson, who was one of three Wheaton College public relations staffers at the show. "Of course, that's still not such a bad deal."

The audience (approximately 267 people) is responsible collectively for over $2 million dollars in taxes... Ouch.


Listed below are links to weblogs that reference Oprah's Car Giveaway Not Quite "Free":

» Carnivorous Conservative linked with Bush a goner?

» Jeff Blogworthy.com linked with Welcome to the wonderful world of taxation

» The LLama Butchers linked with Bridezilla update

Comments (19)

So sell the damn for even 2... (Below threshold)

So sell the damn for even 20,000 - then you still make 13,000 - Either way its a hand up and no one is going to force these people to accept the "free" auto.

So put your little whiny article into perspective

So sell the damn for even 2... (Below threshold)

So sell the damn for even 20,000 - then you still make 13,000 - Either way its a hand up and no one is going to force these people to accept the "free" auto.

So put your little whiny article into perspective

Isn't that the same argumen... (Below threshold)

Isn't that the same argument being made regarding the estate tax (i.e., family has to sell the farm to pay the tax)?

No, KipEsquire. Not the sa... (Below threshold)

No, KipEsquire. Not the same argument.
The family farm is already owned and maintained by the the family's labor and expertise, often for generations. It was not gifted to them by some philathopist. They EARNED it and should be able to pass it down to the next generation or others to continue, NOT have it siphoned off by a bunch of bureaucrats to redistribute to a bunch of whinyass socialists.

Also, depending on what sta... (Below threshold)

Also, depending on what state, the family farm has continuously paid into the system loads of property and income taxes and various other taxes on goods and services. The death tax is usury in the most blatent form.

Oprah is insanely rich. If... (Below threshold)

Oprah is insanely rich. If she really wanted to help all of these people out of the goodness of her heart, she can cough up what will probably add up to less than a penny on the dollar she earns this year and cover their taxes too.

25 percent taxation is not ... (Below threshold)

25 percent taxation is not a "good deal." While I do not whine about the new owners having to pay taxes - this story points out the insanely EXCESSIVE taxation we are subject to. A flippant attitude toward oppressive taxes only engenders more of the same.

The thing that gets me is t... (Below threshold)

The thing that gets me is that Oprah didn't give away anything. She looks like the hero, but in reality, it was just a marketing stunt by GM/Pontiac.

For me, this is the classic... (Below threshold)

For me, this is the classic argument that most people, once they leave college, start working and earning money become republican.

Once the realize the levy of taxes against them and they see where it is going, and in many cases, not going, they object to the socialist memes.

Unfortunately, half the workers in this country don't pay any taxes, and combined with the students and pensioners, they continue to keep the other half of workers enslaved in paying taxes to keep them in the manner with which they are accustomed.

Maybe they should declare t... (Below threshold)

Maybe they should declare them "dividends" and pay 15% like all the high rollers do.

What, you thought Oprah's a... (Below threshold)

What, you thought Oprah's audience members were intelligent, thoughtful people?

- Just to add another rock ... (Below threshold)

- Just to add another rock to their ulcer gardens there's a good chance that a number of the happy winners will get IRC audits since the monetory mavins of blood lust substitute intelligence with bench marks like "...any sudden increase in unearned wealth or holding's..."...Congratulations folks ... Press hard....all forms are in triplicate....

Any of these "winners" (and... (Below threshold)

Any of these "winners" (and I use the term loosely) bitching about the fact that they now have to pay taxes on their windfall should have their cars taken away from them and given to me so that I may run them over with it.

Just to point out that it's... (Below threshold)

Just to point out that it's not a 70% off car, unless you were planning to make a 30% down payment because unlike a 70% off car, these payments are due in one big lump sum payable to Uncle Sam via the IRS, if you had a 70% discount on a car, you could still get payment terms. Maybe next time Oprah will make them pay a token amount for the car so it is no longer a prize and therefore not income...

Ummm.........so they got a ... (Below threshold)

Ummm.........so they got a FREE car worth almost $30,000 (more than I've payed for any of mine), and they're crying about $7,000 in income tax? What would they say if Pontiac didn't PAY the local tax, tile and License? Get a loan, you have almost $30,000 in collateral free and clear.

"Maybe next time Oprah will... (Below threshold)

"Maybe next time Oprah will make them pay a token amount for the car so it is no longer a prize and therefore not income..."

That wouldn't work. The difference between what they paid and the FMV would count as taxable income (there are very few schemes the IRS hasn't thought of long ago).

@ Cletus 1n3: In addition t... (Below threshold)

@ Cletus 1n3: In addition to what Spoons rightfully points out above, Ophra could not pay for the taxes of the winners, because this too would be a clear and undeniable accsession/increase of personal wealth, i.e taxable income.
Actually, this is one of the fairest and best regulations of American income taxation compared to other countries, because it does only tax your increase of wealth and income, other than the above mentioned estate tax.

Some agree Oprah did help t... (Below threshold)

Some agree Oprah did help them out of their financial hardship by giving them a car. However, assuming the person kept the car, how are they going to afford the insurance, servicing & running cost of the new car if they are already in financial hardship! IT's like if you cannot afford the run a ferrari, what's the point of having one even if you get it for free.
Oprah might help them if the person sells the car and whatever money left after tax deduction---etc.
ln my opinion, giving them more material things doesn't help them in anyway, it just doesn't solve the problem!

Hope all understand the tru... (Below threshold)
Nick at Night:

Hope all understand the true cost of the car will be determined later, not just yet. How many will fall thru the cracks and not pay anything to the IRS? Too many, just wait and see. Is there a list of all the winners names and State of residence?






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