Game Show Winnings

[byrd62]

I wouldn't be surprised if this subject's been discussed before, but while no one, to my best knowledge, has ever done an economic study on the profit margins of TV game shows, if such a show takes in much more money it takes to produce it [in other words, has a high profit margin], shouldn't some of the profits go toward paying taxes on the contestants' winnings, thus rendering them tax-free?

Otherwise, what you have is a situation where the poor guy who wins that new car on TPiR gets socked with two huge tax bills--one from the Federal government, the other from the State of California--that he might not be able to pay unless he sells the car, or otherwise turns down that car he just won, while CBS and FremantleMedia make money off this guy's misfortune.

[beatlefreak84]

While I think any game show contestant would be on board with having all of their winnings be tax-free, it doesn't bother me too much that they aren't.  Here's why:

1.  Even if you're taxed on your prizes, you can think of it as you purchase them for a deep discount (unless you win a luxury car, most people will probably remain in the 28% tax bracket).
2.  If you win anything in a casino, lottery, etc., you're taxed on that.  You can think of it as you did some extra work for some extra income.
3.  If you had no use for a spa beforehand, why would having it be tax-free make it any different?

Trust me; I would've loved to receive all my Wheel winnings tax-free.  That being said, however, I never blinked at the thought of having to pay taxes.  The experience is what I was after, and I still had plenty of money leftover to put away and save for a car.

Anthony

[chad1m]

[quote name=\'beatlefreak84\' post=\'239292\' date=\'Apr 12 2010, 10:27 AM\']3.  If you had no use for a spa beforehand, why would having it be tax-free make it any different?[/quote]I'll have much more use for a $7,000 spa when it's $0 than when it's $7,000.

[clemon79]

[quote name=\'byrd62\' post=\'239291\' date=\'Apr 12 2010, 06:30 AM\']if such a show takes in much more money it takes to produce it [in other words, has a high profit margin], shouldn't some of the profits go toward paying taxes on the contestants' winnings, thus rendering them tax-free?[/quote]
Only if you are prepared to make the casinos and lotteries (who, trust me, have WAY bigger profit-margins) do the same thing.

Are you?

It's income. Income is taxed in this country. If you have a problem with that, there are other countries you could move to.

[ten96lt]

[quote name=\'clemon79\' post=\'239301\' date=\'Apr 12 2010, 11:16 AM\'][quote name=\'byrd62\' post=\'239291\' date=\'Apr 12 2010, 06:30 AM\']if such a show takes in much more money it takes to produce it [in other words, has a high profit margin], shouldn't some of the profits go toward paying taxes on the contestants' winnings, thus rendering them tax-free?[/quote]
Only if you are prepared to make the casinos and lotteries (who, trust me, have WAY bigger profit-margins) do the same thing.

Are you?

It's income. Income is taxed in this country. If you have a problem with that, there are other countries you could move to.
[/quote]
I have no problem with money being taxed, it's liquid income so there's no way to say it shouldn't be taxed. What I do have a problem with is taxing prizes. Why is a trip to Las Vegas considered income? Where can I spend it? I can't use a hot tub to pay off a bill or buy a car or house. I can't exchange it or spend it, I can only consume it. If someone were to sell that prize (if they can unlike a trip) I think they should be taxed for what they sell it for, but I think if they keep the prize as is, it should be tax exempt. I'm sure there's countless times someone won a trip or expensive prize, but couldn't keep it because they couldn't afford the tax liability.

[clemon79]

[quote name=\'ten96lt\' post=\'239302\' date=\'Apr 12 2010, 10:33 AM\']I can't use a hot tub to pay off a bill or buy a car or house.[/quote]
Y'ever heard of Craigslist? Sure you can.

And that's why it should be taxed.

I see your argument for "tax it if they sell it." Problem is, there is no way for the gub'ment to track that transaction. So, you get taxed off the top. Deal with it.

[Joe Mello]

[quote name=\'chad1m\' post=\'239296\' date=\'Apr 12 2010, 12:10 PM\'][quote name=\'beatlefreak84\' post=\'239292\' date=\'Apr 12 2010, 10:27 AM\']3.  If you had no use for a spa beforehand, why would having it be tax-free make it any different?[/quote]I'll have much more use for a $7,000 spa when it's $0 than when it's $7,000. [/quote]
*ding*

[quote name=\'clemon79\' post=\'239301\' date=\'Apr 12 2010, 01:16 PM\']It's income. Income is taxed in this country.[/quote]
*ding*

[quote name=\'clemon79\' post=\'239303\' date=\'Apr 12 2010, 01:41 PM\'][quote name=\'ten96lt\' post=\'239302\' date=\'Apr 12 2010, 10:33 AM\']I can't use a hot tub to pay off a bill or buy a car or house.[/quote]
Y'ever heard of Craigslist? Sure you can.[/quote]
*ding ding ding*

I remember a couple of years ago an interview with a guy who won 2 cars on Price.  IIRC, he sold one to pay the taxes on the other.

One thing too many people fail to realize is that the government runs on taxes, so any cuts to taxes deprives the government of funding for stuff both good (unemployment) and bad (pork).  This is not to say that all taxes are good (looking at you, Dan Onorato), but all taxes are not bad.

Of course, if you disagree with me, there are several political "parties" that you join that share in your beliefs.  This country is still free, as far as I know.

[ten96lt]

[quote name=\'clemon79\' post=\'239303\' date=\'Apr 12 2010, 11:41 AM\'][quote name=\'ten96lt\' post=\'239302\' date=\'Apr 12 2010, 10:33 AM\']I can't use a hot tub to pay off a bill or buy a car or house.[/quote]
Y'ever heard of Craigslist? Sure you can.

And that's why it should be taxed.

I see your argument for "tax it if they sell it." Problem is, there is no way for the gub'ment to track that transaction. So, you get taxed off the top. Deal with it.
[/quote]
I understand that about Craigslist (which is why I mentioned "tax it if they sell it" ), but it's easier to sell a car than it is to sell a hot tub on there and it's harder to avoid taxes on a car since there's the issue of transferring the title and you know the DMV is going to want the sales tax at least so you know somebody knows about the sale and should be reported to the IRS. eBay makes it easy to sell also, but you can't tell me the IRS can't get on eBay's ass and tell them to start reporting sales. Trips can't even be transfered on most game shows so what would you do with that? I don't have a problem with taxes on game show winnings in general. But I think either A. If the show is going to offer a prize that could put a tax burden on the contestant, they should include the taxes as part of the prize. Didn't the Monty Hall Version of LMAD include taxes in the cars they gave away when the announcer made the description of the car in the big deal?
or B. Just make trips and certain prizes tax exempt.

[clemon79]

[quote name=\'ten96lt\' post=\'239307\' date=\'Apr 12 2010, 11:18 AM\']but you can't tell me the IRS can't get on eBay's ass and tell them to start reporting sales.[/quote]
Sure they can. Now explain to me the difference between that and me going to my next-door neighbor and saying "hey, wanna buy a gazebo?"

Trips can't even be transfered on most game shows so what would you do with that?

Turn it down.

But I think either A. If the show is going to offer a prize that could put a tax burden on the contestant, they should include the taxes as part of the prize.

Have you met my friend Mr. Lesko?

Didn't the Monty Hall Version of LMAD include taxes in the cars they gave away when the announcer made the description of the car in the big deal?

Good question. I think the taxes included covered sales tax, but there's no way it could cover income tax because the production had no way of knowing what tax bracket the winner was in.

[Loogaroo]

[quote name=\'clemon79\' post=\'239308\' date=\'Apr 12 2010, 01:33 PM\'][quote name=\'ten96lt\' post=\'239307\' date=\'Apr 12 2010, 11:18 AM\']but you can't tell me the IRS can't get on eBay's ass and tell them to start reporting sales.[/quote]
Sure they can. Now explain to me the difference between that and me going to my next-door neighbor and saying "hey, wanna buy a gazebo?"

Trips can't even be transfered on most game shows so what would you do with that?

Turn it down.[/quote]
I think that's the heart of the argument though: if you won something, you shouldn't be forced to give it up just because some external force - however ubiquitous it may be - is tacking on a surcharge to it. Might as well not win your way on stage and get the Cutco knives and Lobstergram instead.

(Come to think of it, I wonder if TPIR contestants can do that - trade in one of their bigger prizes for the CNAOSWR stuff if they don't get it already.)

The question is whether or not it's the responsibility of the production company to cover those costs, and it clearly isn't. The government may consider passing a law rendering contest winnings non-taxable (I remember Stosh making a crusade of it years back), but game show winners isn't exactly an underprivileged group that either party can pander to.

[ten96lt]

[quote name=\'clemon79\' post=\'239308\' date=\'Apr 12 2010, 12:33 PM\'][quote name=\'ten96lt\' post=\'239307\' date=\'Apr 12 2010, 11:18 AM\']but you can't tell me the IRS can't get on eBay's ass and tell them to start reporting sales.[/quote]
Sure they can. Now explain to me the difference between that and me going to my next-door neighbor and saying "hey, wanna buy a gazebo?"

Trips can't even be transfered on most game shows so what would you do with that?

Turn it down.

But I think either A. If the show is going to offer a prize that could put a tax burden on the contestant, they should include the taxes as part of the prize.

Have you met my friend Mr. Lesko?

Didn't the Monty Hall Version of LMAD include taxes in the cars they gave away when the announcer made the description of the car in the big deal?

Good question. I think the taxes included covered sales tax, but there's no way it could cover income tax because the production had no way of knowing what tax bracket the winner was in.
[/quote]
What are the odds of your next door neighbor wanting a gazebo or grandfather clock or cotton candy machine at the time you win one? Probably a lot less than someone looking specifically in that category on eBay you listed it in. How much tax revenue would they be losing because of the number of game show contestants selling a a $2000 grandfather clock they won? It just means congress will have to cut another pet project and piece of pork out. Oh my heart bleeds!  And as mentioned above. I thought part of the fun of getting on these shows was to win "fabulous prizes." So what's the point of going on a show to win, then turn it down because of the taxes? I don't see it being hard for shows to figure out how much tax money to cover a prize if you assume 28% like with gambling winnings. That should be more then enough to cover.

[clemon79]

[quote name=\'Loogaroo\' post=\'239310\' date=\'Apr 12 2010, 12:09 PM\']I think that's the heart of the argument though: if you won something, you shouldn't be forced to give it up just because some external force - however ubiquitous it may be - is tacking on a surcharge to it.[/quote]
Nobody's "forced" to do anything. That's just how it works, until, as you said, the gub'ment passes a law to do otherwise. Which I really don't have a problem with so long as the tax can be made up elsewhere.

Might as well not win your way on stage and get the Cutco knives and Lobstergram instead.

Which, technically, you're also supposed to declare, are you not? Just 'cuz the sum total is less than $500 and the production doesn't have to file on it does not *technically* absolve you of the responsibility to declare and pay your tax on it. (Kinda like out-of-state sales-tax for online purchases.)

The question is whether or not it's the responsibility of the production company to cover those costs, and it clearly isn't.

Exactly. More to the point, people who have a problem with this and think the production is being cheap and should pick up the tab are free not to apply to appear on a game show. And since there is no shortage of people willing to do that and even more ready to step in if some people DID make a big deal out of it, I don't see a reason why a production company should acquiesce.

(I remember Stosh making a crusade of it years back)

I'm shocked. Shocked, I say.

[clemon79]

[quote name=\'ten96lt\' post=\'239313\' date=\'Apr 12 2010, 01:11 PM\']What are the odds of your next door neighbor wanting a gazebo or grandfather clock or cotton candy machine at the time you win one? Probably a lot less than someone looking specifically in that category on eBay you listed it in.[/quote]
You are completely missing my point. You said "hey, Ebay's big enough that the gub'ment should be able to track sales made through that." And that's probably true. And I'm saying that someone selling something to someone else over Ebay is EXACTLY the same as me selling something to my next-door neighbor. Person A gives something to Person B, Person B, gives money to Person A. Yet, there's no way for the government to track that sale. Which means that your brilliant idea of "well, don't tax it until it gets turned into cash!" doesn't hold water.

How much tax revenue would they be losing because of the number of game show contestants selling a a $2000 grandfather clock they won? It just means congress will have to cut another pet project and piece of pork out. Oh my heart bleeds!

I don't disagree, but this is an entirely different argument.

I thought part of the fun of getting on these shows was to win "fabulous prizes." So what's the point of going on a show to win, then turn it down because of the taxes?

Then...don't go on the show.

I don't see it being hard for shows to figure out how much tax money to cover a prize if you assume 28% like with gambling winnings.

I don't see it being hard to do that either.

I further have not heard you tell me one single reason why they *should* do that other than "it's the morally right thing to do."

[ten96lt]

[quote name=\'clemon79\' post=\'239315\' date=\'Apr 12 2010, 02:22 PM\'][quote name=\'ten96lt\' post=\'239313\' date=\'Apr 12 2010, 01:11 PM\']What are the odds of your next door neighbor wanting a gazebo or grandfather clock or cotton candy machine at the time you win one? Probably a lot less than someone looking specifically in that category on eBay you listed it in.[/quote]
You are completely missing my point. You said "hey, Ebay's big enough that the gub'ment should be able to track sales made through that." And that's probably true. And I'm saying that someone selling something to someone else over Ebay is EXACTLY the same as me selling something to my next-door neighbor. Person A gives something to Person B, Person B, gives money to Person A. Yet, there's no way for the government to track that sale. Which means that your brilliant idea of "well, don't tax it until it gets turned into cash!" doesn't hold water.

How much tax revenue would they be losing because of the number of game show contestants selling a a $2000 grandfather clock they won? It just means congress will have to cut another pet project and piece of pork out. Oh my heart bleeds!

I don't disagree, but this is an entirely different argument.

I thought part of the fun of getting on these shows was to win "fabulous prizes." So what's the point of going on a show to win, then turn it down because of the taxes?

Then...don't go on the show.

I don't see it being hard for shows to figure out how much tax money to cover a prize if you assume 28% like with gambling winnings.

I don't see it being hard to do that either.

I further have not heard you tell me one single reason why they *should* do that other than "it's the morally right thing to do."
[/quote]
It is exactly the same, but my point is, the odds of those sales going through without a formal channel are small since some of those prizes are in such a niche market it would make the revenue negligible to the argument. You're also assuming all people who sell won't report the income from the sale. The IRS uses the honor system all the time for people making deductions and even sending in a tax return. If these people aren't declaring they made $9000 from selling a hot tub they won, then that probably isn't the only thing they're being dishonest about on their taxes and will get caught. Cars and big ticket items will be hard to hide from. The trips should absolutely tax exempt since they can't be sold and must be used. I don't enter contests that have trips as prizes solely for that reason and I'm sure many people don't go on certain shows for that reason.
Now, why should shows add the tax? Because it would add some truth in advertising for shows claiming to win a "free" trip to such and such or a free something for a year. Well technically it isn't free since they are under tax liability and unless they wanna cover the tax, well maybe they should stop throwing the word free around a lot less and be more scrutinized with how they advertise prizes.

[Scrabbleship]

What I don't get is this: Why should the status quo be kept when the rest of the western world (Canada, UK, Eurozone) tax income but don't tax game show winnings. Someone please tell me why what's good for the rest of the western world isn't good for the US?

First sane explanation gets a cookie.