Oprah Winfrey is paying for everything this time (update!)

By brendon September 17, 2010 @ 2:47 PM

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Oprah Winfrey has been ridiculed in the past for her “My Favorite Things” episodes, where she gives her studio audience extravagant gifts, because, among other reasons, they still have to pay taxes on those gifts, the most famous example being the $7,000 they had to pay on a new car.

But this year she’s planning ahead. She’s bringing over 300 members of her audience and staff to Australia for 8 days, and to make sure no one can make fun of her this time, she’s paying everyone’s tax bill too. E! says…

To avoid the messy fallout from her 2004 (car) giveaway, Winfrey reportedly had a certified public accountant on hand after Monday’s 25th and final season premiere, informing the future travelers that the Oprah show would, quite unlike the last time, be paying every last cent of tax, excess fines, baggage costs, passport fees and pretty much any other unexpected expense the vacation may have in store for the audience.

Let’s just put our cards on the table here: I’m not very smart. I’ve actually been told that buzznet gets money from the government for employing me, but isn’t her paying the taxes also a gift? If she gave them money but no trip, that would be a gift. So isn’t money and a trip just two gifts? And so now the audience has to pay taxes on both those things, right?

Jesus, it’s like Oprah has declared psychological warfare on her audience, just to see how fucking crazy she can drive them. Has this show been awesome the whole time and I just never realized it?

SELF SERVING UPDATE – Aww I fuckin knew it! Ruggedly handsome reader Brendan says: “You are 100% right. Paying someone’s tax debt is just like giving them cash, which is of course taxable. This creates a loop of “tax on tax” (see Old Colony Trust). If Oprah really promised to “be paying every last cent of tax,” then she must pay their taxes, then their taxes upon receiving her anti-tax gift, then the taxes on *that* gift, and on and on forever. Since each tax payment is smaller than the last, she isn’t promising infinite money. She is promising the gift value * n/(1-n), where n is their tax rate. (So if you assume their tax rate is 30%, paying the entire loop means she is paying .3/(1-.3) = 2.333 times the value of the gift in taxes, in addition to the gift.)”

wwtdd

(20) Comments

  1. Heisenberg 09/17/2010 14:52

    I said the exact same thing on Warming Glow the other day (even mentioned WWTDD as the source of my link) and DangerGuerrero was nice enough to respond and break it all down for my pea-sized brain. I’m far too lazy to go find that article and link it but feel free to do that, or just wait for DangerGuerrero to re-explain it since he’s probably here too. Whatever you want to do, what am I, your father?

  2. deepayes 09/17/2010 14:58

    I STILL don’t see the problem here.
    Why is “forcing” people to pay 30% of the actual value of something such a problem?

    Hey, do you want this brand new $20,000 car? Well it’s gonna cost you $6,000.

    That’s a fucking deal.

    And now we’re supposed to be upset because some people are getting a $15,000 vacation for 1/3 the cost?

    Fuck that. It’s still a fantastic gift, even if you have pay taxes. Also, let’s not forget, no one is being forced to accept these gifts.

  3. pepperjr. 09/17/2010 15:08

    Who gives a shit?
    Besides, you don’t have your facts straight..gay boy. The Australian taxpayers are paying for the trip.

  4. SinDs 09/17/2010 15:11

    you tell him, pepper!

  5. ucbstory 09/17/2010 15:13

    You dont have to pay taxes on a gift because the giver of the gift. However, this will most likely count as normal income for the winners. Usually gameshows and other places that give people gifts like this reimburse the winner in a way that takes that into consideration the tax on the reimbursement for a tax problem. The total amount takes into consideration the tax on the amount won, the tax on the amount given to reimburse the tax on the amount won, the tax given to reimburse the tax given to reimburse the amount won, and so on until the number is negligble.

    It would be pretty funny to have a show that involves giving poor people extravagent gifts, and films them as the tax bill destroys their lives. If not a show, at least something fun to do.

  6. bullitt 09/17/2010 15:16

    It’s still a gift so it basically becomes a math equation. If the gift was worth $100 at a 30% rate then she owes taxes of 30 (simple) but since the gift adds the value you have to figure out how much the total gift is so you don’t pay any taxes at all.
    So X (totalgift) -.3x (taxportion)=100(original gift)
    x=142.85 so she’d have to throw in another 42.85 to cover the taxes.

    Isn’t math swell?

  7. Mongo 09/17/2010 15:17

    We waited until 3 eastern for this shit? Fuck you! We want tits!

  8. Slaappy 09/17/2010 15:17

    I Nostradamus, foresee a flying kangaroo going into the sea

  9. Woodsman 09/17/2010 15:19

    ucbstory has done the math – - the incremental “gifts” keep on till they fall below the “minimus” rule (too small to worry about).

    I don’t know how travelling with Oprah and other fans is a “gift” though — more like a mobile bingo hall with no exit for 18 hours.

  10. Woodsman 09/17/2010 15:21

    Slaaapy: I think you meant flying water buffalo

  11. ucbstory 09/17/2010 15:23

    I hope their jet crash lands on one of those remote islands filled with a platoon of Japanese soldiers that never got the message that World War II was over. Everyone being bayoneted by 80 year old Asian men would be just the curve ball ending this show needs (although I predicted it back in 1997).

  12. pepperjr. 09/17/2010 15:26

    Oprah will blend right in with the Aboriginal people….

  13. pepperjr. 09/17/2010 15:28

    ucbstory, why not just let the plane crash…the end!
    If they do survive, Oprah will eat them….

  14. MadAlfred 09/17/2010 16:11

    Oprah can pay everyone’s taxes if she wants to. You’re right that that payment will also count as a gift. But the tax debt from the first gift will have been satisfied.

    So if the trip costs $15,000 and we’re settling on a 30% tax rate, then Oprah can pay the $3,000 to cover the taxes from her gift. Then the crowd will get a tax bill for that $3,000. She could theoretically pay that also, thus increasing the size of her gift, but decreasing the size of the tax liability for the recipient.

    I think that’s right. Her car gift was in my Tax Law class… I only got a B, so my understanding may be flawed.

    An interesting (not really) issue is that her gift and tax payments might push the audience members into a higher tax bracket, unless she specifically selected her audience members based on their prior income level to ensure that wouldn’t happen.

  15. Observer 09/17/2010 19:55

    Gift tax is a liability of the donor. ….. The exclusion was recently 11,000 per recipient….but I am to lazy to refresh that data…..

    Each recipient will have a different tax rate …..the 28% rate is on the “next dollar”….the recipient receives if the recipient gets to the 28% bracket….

    ..all that being said……the main question to be asked is:

    “WHO GIVES A FLYING FUCK ABOUT THIS WAGON-FUL OF PIGSHIT, OPRAH”…..

  16. Fiers 09/18/2010 00:40

    If the gift is $100 with 20% tax, she would just have to give $125. There’s no recursive computation required. Your source is kind of stupid.

  17. Fiers 09/18/2010 00:42

    Plus there are limits on how much you can give before taxes. Something like 10-15 grand.

  18. Tits 09/19/2010 05:06

    Who gives a shit about fat Americans. Take your fucking fat host and audience and fuck off back to the US and leave us alone.

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  20. goldb69 09/20/2010 09:45

    Goddammit Brendan! If I wanted to learn math I would’ve gone to a more scholarly website, like hustler.com. p.s. hope Oprah and her audience get eaten by dingoes/cornholed by Crocodile Dundee.

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