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"Losing my faith in humanity ... one neocon at a time."

Monday, January 17, 2005

Looking the gift horse in the mouth while your friend kicks it in the sack

posted by Jazz at 1/17/2005 10:50:00 AM

NOTE: YOU ARE VIEWING AN ARCHIVED POST AT RUNNING SCARED'S OLD BLOG. PLEASE VISIT THE NEW BLOG HERE.

This post deals with the next wave of criticism being aired about Oprah Winfrey's gifts to various people and the tax burdens inherent in these presents . First it was a group of audience members who received cars and more recently a number of teachers getting expensive gifts. The story and commentary came to my attention via Katie at A Constrained Vision. Here is the portion of interest to me:

Oprah Winfrey caused a big fuss last year when she stuck all of her audience members with big tax bills by giving them new cars. Apparently, that episode taught her a lesson--when she gave away over $15,000 in gifts to teachers in November, she also gave them $2,500 to help defray the taxes. But the TaxProf reports that she didn't learn her lesson well enough:
Although Oprah gave each member of the audience $2,500 to help defray taxes, the media wrongly reported that there would be "[n]o Pontiac boomerang effect this time around." The Shop Talk folks [of the Journal of Taxation] ran the numbers and report that Oprah's $2,500 cash subsidy will cover less than half of the federal and state tax bill caused by inclusion of the $15,500 in each audience member's income. Instead, Oprah should have paid each audience member $8,000 to eliminate all of the tax liability.
First, a bit of disclaimer and disclosure.

Disclaimer: I am not taking Katie herself to task for any opinion on this, as she seems to be simply reporting numbers and tax figures, rather than being *too* critical of the gifts in question, though it certainly has a negative tone.

Disclosure: My knowledge of Oprah Winfrey would likely fit in a cat's eye tooth. I honestly neither like nor dislike the woman, but simply know very little about her. I don't watch her talk show - not because I dislike her, but rather because I'm simply not interested in the entire genre, and I believe most of them air while I'm at work anyway. She seems to be at least a fair actress, (The Color Purple was pretty good) and seems to be generous with her wealth. That may or may not be for selfish publicity reasons, but giving away cool gifts is still always nice. She encourages reading, which is good, but I have no idea what her politics are, if any.

On to the question at hand. Where exactly is this criticism coming from and why is this even a story? So the billionaire talk show host gave some cars to her audience and then gave some expensive gifts to a group of teachers. That's clearly not the problem. No... it seems that some people are castigating her for leaving these poor recipients of her generosity stuck with paying taxes on the gifts they received. Oh, excuse me, but "boo f**king hoo."

This "problem" has been around as long as I have. Back in the bad old days of television, Monty Hall was hit with the same charges when contestants on his "Let's Make a Deal" show suddenly realized, upon arriving home, that they would have to pay taxes on the new car they'd just won. This shouldn't come as a surprise to anyone. When you get something expensive, no matter how you acquired it, the government will often have an interest in getting some taxes out of the deal. If you don't like the tax system as it pertains to gifts, try working to change it instead of excoriating the gift giver. And then, to make matters worse, when Oprah tries to toss in some cash to offset the taxes, she's attacked for not calculating the correct amount.

These people had a number of options open to them. First, of course, they could just pay the taxes, assuming they had the money, and be happy that they had a nice gift or a better car than they could afford on their own. If they couldn't raise the funds for the taxes, they might consider a personal secured loan with the fully paid off car or gift as collateral. If they are in such desperate shape that a loan wasn't even an option, the IRS will generally work with people to allow them to make payments over time for taxes they can not afford to pay. The last option, of course, assuming that you are in such dire financial peril that none of this would help, is to simply admit that you aren't in a position to accept that sort of gift and say, "No thank you."

EDIT: Oh, yes... I nearly forgot. The other option is to simply *sell* the gift, pay the taxes, keep the difference and buy yourself something else that's cheaper.

Personally, this sounds like more of a witch hunt to try to muddy Winfrey's name and tear down the nice gesture she made by giving gifts than any reasonable complaint. If I were her, I'm cynical enough that I would simply say, "Fine!" and just not give away any more gifts to the ungrateful bastards.