The Hidden Costs of Winning Big
You’ve probably watched a game show and fantasized about what you would do with the money that contestants win, or how much you would love that brand new car. Or maybe you’ve seen the famous episode of Oprah wherein “You get a car! And you get a car!” and you thought to yourself how great it would be to be handed a brand new, fully loaded, G6, just by virtue of being in the audience. It’s true that those audience members were famously lucky and the viewers at home surely envious, but don’t beat yourself up too much, because there was a catch for every single one of those audience members that people watching back home never heard about.
The year was 2004. Oprah called it her “wildest dream season, because this year on the Oprah show no dream is too wild, no surprise too impossible to pull off.” She had already given away 11 of the brand new Pontiacs to some lucky viewers, and claimed to have one more car left for a lucky member of the studio audience as well. At this point she instructed her staff to bring out wrapped gift boxes, one for each person in the audience, claiming that one of the boxes had in it the last key to the last new Pontiac G6. However, anyone who has heard of this famous moment in giveaway history knows that every single one of those boxes had a key in it. The audience went wild. Oprah herself couldn’t contain her excitement “you get a car! You get a car!” She later told the press that she “wanted it to be bigger than Santa Claus,” and, to anyone watching at home, that’s exactly how she must have seemed. For those 276 members of the studio audience, however, there was something else that came with each car, something that didn’t make it into much of the news surrounding the ordeal, but something so inevitable it’s the only other thing guaranteed in life besides death: taxes.
The 276 audience members would have had to pay about $7,000 in taxes in 2004 on their new Pontiacs. Luckily, as with all taxes, they are figured proportionally, meaning that whatever the amount being asked in taxes, the car would be worth far more itself. So, thankfully, everyone came out ahead in this situation, because, when given the option to pay taxes or forfeit the gift, anyone not planning on keeping the car and paying the $7,000 could sell the car, pay the taxes, and keep whatever was left instead. Unfortunately, the taxes are calculated using the MSRP, which is usually higher than the price that dealers will end up selling the same car for, and certainly higher than any of the award winners would have been able to turn around and sell their car for.
Another problem is that in some states, like California where a lot of prize-winning game shows are recorded, taxes are demanded immediately on any prize winnings. So if you win big on The Price is Right, you might find yourself questioning just how right the price is when forking over thousands of dollars before you’re actually allowed to walk home with any of the prizes. And if your prizes aren’t the easiest to sell, like a washer and dryer set, or a new pool table, you might be taxed on a figure many times that of what you are actually able to sell the items for. When all is said and done, you’ll probably end still end up with something to show for it, just not nearly as much as it seems to viewers at home. Oprah might have made a lot of dreams come true that year, but freedom from taxes is a dream that even Oprah can’t make a reality.