From the Chicago Sun Times:
Oprah called the show part of her “wildest dreams” season.
But for many of the 276 recipients of the new Pontiac cars that the talk-show queen gave away last week, there was a bit of reality to come with that dream — they are going to have to fork over thousands of dollars in taxes.
It turns out that free car wasn’t so free.
That’s because while Pontiac agreed to pay for most of the local charges — things like state sales tax and licensing fees — the recipients have to report the cars as income once tax time comes.
By adding $28,500 to someone’s income, it can push them into a higher tax bracket — which means they will have to pay about 25 percent or more of the car’s value in taxes. And for a nearly $30,000 car, that probably means, for most of the recipients, shelling out $7,125 for the “free car.”
And if you live in Illinois, you can expect to tack on another 3 percent or so in state income taxes.
“It’s not really a free car, it’s more of a 75 percent off car,” said Susan Nelson, who was one of three Wheaton College public relations staffers at the show. “Of course, that’s still not such a bad deal.”The audience (approximately 267 people) is responsible collectively for over $2 million dollars in taxes… Ouch.