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.)”