Slashdot Log In
Uncle Sam Spoils Dream Trip To Space
Posted by
kdawson
on Mon Jan 29, 2007 05:51 AM
from the taxing-the-vacuum dept.
from the taxing-the-vacuum dept.
gollum123 writes about a dream come true and a dream dashed. Brian Emmett, a software consultant from the San Francisco Bay area, entered a contest sponsored by Oracle in 2005. He answered some questions on Java coding, won a free trip into space, and then reluctantly gave it up. The latter decision came once he had computed the taxes he would have to pay on the $138,000 prize — roughly $25,000. From the article: "Since the Internal Revenue Service requires winnings from lottery drawings, TV game shows, and other contests to be reported as taxable income, tax experts contend there's no such thing as a free spaceflight. Some contest sponsors provide a check to cover taxes, but that income is also taxable."
Related Stories
[+]
Become the Fifth Space Tourist 119 comments
MattSparkes writes "There have been four space tourists so far. You could become the fifth — even if you aren't a dot-com millionaire. New Scientist is running a competition to send one person on a sub-orbital flight, 62 miles above the Earth. All you have to do is write 250 words on what the best ever patented invention is. Personally I think it has to be the Levitationarium." Of course if you win you'll probably have to pay the taxes.
This discussion has been archived.
No new comments can be posted.
The Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way.
Full
Abbreviated
Hidden
Loading... please wait.
A dream come true? (Score:5, Funny)
* There are no free rides to outer space
* Dream free trip to space brings black hole in wallet
* Win a free ticket to space? Read the fine print
* Taxes
* Space tourism yet to take off
* Free trips to space pose some taxing dilemmas
etc etc etc.
Re: (Score:3, Insightful)
(otherwise, all participants would have to pay an equal share of taxes, since their presence at the "lottery" is a service the state grants, and the winning of it _is not_)
Re:A dream come true? (Score:4, Insightful)
Not that I particularly agree with the state taxing winnings, but they don't help you work, yet tax your income. How is winning something different?
Parent
Re:A dream come true? (Score:5, Insightful)
Now, without "enforcement of law and public order, protection of property, economic infrastructure (roads, legal tender, enforcement of contracts, etc.), education systems, health care systems" would you be able to work?
Parent
Re: (Score:3, Insightful)
Well, without all that would you be able to collect your prize?. Would Oracle have been able to organise the contest?
Hmmmmmmn. I still don't really see a difference between govt taxing earnings & govt taxing prizes.
Re:A dream come true? (Score:5, Insightful)
Parent
Re:A dream come true? (Score:5, Insightful)
Parent
Re:A dream come true? (Score:4, Informative)
That said, in order for the trip not to be free, they'd have to pay the $25,000 tax, then (as the summary notes) pay the tax on the $25,000 tax payment (since that's additional compensation), then the tax on the tax on the tax, etc. Luckily, the series converges!
More importantly, who decided that the trip was worth $138,000? Is there a liquid market in spaceflights? Why couldn't they declare it to be a special, "discount" trip worth $5? Note that this is similiar to the record industry declaring the "value" of "stolen" music -- how much would it really have sold for? And note that unlike the luxury car, this good is not transferrable.
Parent
Re:A dream come true? (Score:5, Informative)
x = 0.25(100,000 + x) ---- Thats 25% of the sum of 100,000 and itself
4x = 100,000 + x
3x = 100,000
x = 33,333.33 ----- Thats it, it pays for itself and the gift. Tada!
Parent
Re:A dream come true? (Score:5, Interesting)
When you sell something, you have to pay the VAT, but only for what you're earning (that is, buy for $100 and sell for $120, you pay the tax for $20, not for $120). That means, if you're a "computer tech" like me, you don't "buy-and-sell", you just sell. That is, if I charge someone $ 300, I have to pay the tax for $300. Also, besides that tax there's the Gross Income tax, 3,5% (yes PERCENT) of EVERYTHING you earn, whether you have made profit of it, or not. The VAT is for national government, and the Gross Income is for the province.
As if that wasn't enough, we have a plethora of taxes you could never dream of, such as the Check (UK: Cheque) Tax, the Money Transfer tax, the "sending money offshore" tax, etc. Whenever someone deposits a check in your account, the government just goes and grabs the tax for it out of your bank account (that's right, they just go and grab it). You can write that off your Gross Income tax, but if you, for some reason, got a big check, more than what you declared in Gross Income, all you get is fiscal credit, not money back from the government.
Oh and don't let me get started on the 'Rich' tax ("Impuesto a la riqueza"). If you're "rich", you pay more. Rich, was someone with $100.000 or more in their bank accounts. Before devaluation, people who had $50.000 pesos (= US $50.000), didn't pay for the tax. Then devaluation came, and people had $50.000 pesos (= $16.000 USD). They sued their banks (the banks, prior to the devaluation, and with the help of the government, didn't let you take out more than $1000 a day on cash). Most people got their original money (USD 50.000), but now it was $150.000. So, people had to pay the "rich tax". That means most citizens here in Argentina are rich. Because not only your cash counts: your car, house, boat, whatever, counts for the rich tax. And a house and a car are worth more than $100.000 pesos, so you pay the tax.
Also, the tax is higher for new cars than for old cars. So people have no reason to "upgrade" their cars, and you see a lot of cars from over 10 years ago.
With all these taxes, you'd think we would have streets covered in gold, Xenon street lights, and public employees that welcome you with a big smile and don't make you wait. Not to mention, some of the best colleges and schools in the world.
But no, we get a terrible education system (the Systems Engineering career hasn't been updated since 1995, and a law project that will allow 1st graders to pass whether they have had good grads or not, because repeating a grade will hurt them psychologically. Also there's no punishment system in the schools. Previously you had points, and when you had too many, you got expelled. Now there's no such thing. You can't even expell a student. My mom was the substitute principal at a school, in her last day as principal, a kid (about 16) shot another kid in the leg. None of them got expelled, or anything. They even tried to blame it on my mom (wtf?). In another school, an 11 year old boy was trying to rape a 6 year girl. The teacher kicked the door down, found both of them half naked, the girl crying. The boy tried to run away, she slapped him so hard, he passed out. They tried to let the kid stay at school and SEND THE TEACHER TO JAIL for hitting him. They managed to get the kid out of that school, and let the teacher stay. All of this because the girl's father was a military general or something, who pulled some strings. If it wasn't for that.. you could imagine.
Also, there's a lot of "insecurity". In some parts of the Great Buenos Aires area, you could get killed (they kill you first and then they rob you). Streets aren't clean, and a pothole could take years to be fixed
Parent
Re:A dream come true? (Score:4, Informative)
Here, there's a lot of talks, stories etc. (rarely gets to the press, but a few does) about security companies employees beating people for no reason, but that's the top of the iceberg. You gotta watch over your shoulder on our capital city and nearby cities
when going to trainstations, there's people who might try to beat you off just because you don't give them a cigarett or you look
too good for their liking or rich.
None of those are Finnish, but mostly immigrants and such. (Now i will be called a racist).
If you are jumped and you defend yourself, you will at bare minimum get fines, probably jail. I did this once, i was 16 (that day
actually was my birthday!), and that guy was ~35yo weighing ~150kg. Defended myself at all means possible, i got sued by
goverment, initially with attempted kill. Finally, they decided i was innocent, but still fined me for 120euros... and all i got
was 180e per month back then. What saved me was that i was still a teenager, but it did require a very good lawyer.
Back on the subject, taxes are insane here too.
If you are an employee, you will pay personal tax of upto over 60% + unemployment fees (2,5%) + church (1%) + health (1,5%) (hope i remember those right), if you happen to have money in the savings account, 28% tax from interest.
Everything has VAT 22%, except food 17%. Gasoline has total tax of ~70%, Diesel a lot less but don't remember the pct at all, it
costs ~30% less, while in truth it costs more to manufacture.
If you buy a 2000e car from Germany, you might have to pay even upto 8 000e of taxes on it if you are unlucky.
If you are entrepreneur, minimum total taxation is almost 50%, for other company form it's ~30% but then you get also personal
tax on top of that.
Also, from all sales you have to pay VAT, but fortunately if your payed VAT (when you buy something, loss) exceeds the amount of
stuff you sold or equals no VAT to pay, and i think they even pay you back if you've paid too much in VAT taxes.
A real life example: monthly salary ~1350e, you get in your hand ~1050euros, apartment (cheap but spacy for one, about 50m2)
~450e, food for the month (1person) 150e, cheapest work travel 40e, and electricity ~30e/month, internet connectivity ~30e/month
and ~+220e for apartment from goverment.
I would think that's the minimal requirements for somewhat enjoyable life, and you are left with 570euros/month.
Currently, if you own a car minimum payments for the year are yearly inspection, car tax and traffic insurance.
Traffic insurance is lower for newer and more expensive cars. My -84 Corolla yearly insurance is ~880e, car tax ~100e, inspection
is ~50e. That's over 1 000e just to keep the car, and the car costs ~1200e. Now they are trying to remove the car tax, install
GPS on every car (or some other tracking method) and issue a tax for every km you drive + add an emissions tax, which naturally
be higher for older & cheaper cars. Top that of that driving with natural gas (aftermarket installation) as a civilian, not
working on transportation business and not a car used for work is not allowed, and what i understood from department's texts,
the fine is over 300euros per day!
For all the taxes you pay here, only thing working somewhat well is social safety net (you will always have apartment etc. if you
are even somewhat sane, and bother to fill out couple forms). Education is bad, healthcare seems to be more like deathcare etc.
Oh yeah, own a house & some land? You own that land only 1m deep, someone finds gold under 1m and wants to digg it, they are
allowed to. City wants the land? No worries, you'll still get something like Market Value -40% for it.
To top that off, summers they lay on the roads saltwater "to keep dust down", which actually makes the roads slippery, and what
when it dries? You get dust + salt!
During winters, they lay ou
Parent
Tax the organiser (Score:5, Interesting)
OTOH: Get a $50K reward from Loyds of London for bravery (of the "are you insane" variety) that saved an oil tanker from sliming the costline near Perth and you will have to pay tax as if it was additional income for that year, ie: the taxman will take 30-50%.
Parent
Re:Tax the organiser (Score:5, Interesting)
Parent
Re:A dream come true? (Score:5, Insightful)
Life still sucks more when you don't.
Parent
Re:A dream come true? (Score:5, Insightful)
Parent
Re:A dream come true? (Score:4, Insightful)
And printed the money that you are paid with, and most importantly, you made and enforced the laws to ensure that the company that you work for will actually pay you for your work, have decent conditions at work including the number of hours and all of that.
Yes, I'm as anti-governemnt as anybody, but I'm more anti-selfish dickhead more, and the government keeps those people and themselves pretty much in check.
Parent
Re:A dream come true? (Score:5, Funny)
Parent
Re:A dream come true? (Score:5, Funny)
Parent
Re:A dream come true? (Score:4, Funny)
Thanks a lot.
Parent
Still Not a Bad Deal (Score:5, Insightful)
...all things considered.
I mean, we're talking about a trip into space. Considering the normally prohibitive cost of recreational spaceflight, $25k almost seems like a bargain. I've seen people blow that much on timeshares for goodness sake. If nothing else he could write a book about the experience and recoup some of the expense.
Discount (Score:5, Interesting)
Re:Discount (Score:4, Interesting)
Worst case they could hire him for an amount such that it was $25000 after tax, which would then give him enough to pay the tax bill with.
Parent
Mods: I hope you have someone do your taxes (Score:5, Informative)
All sorts of things are income, although many aren't routinely claimed as such. Ever won a soda at McDs during that Monopoly promotion? Income. Found a $10 bill on the sidewalk? Income. Taken a pen home from work? Income, unless you returned it. The difference between these and the space trip is that if you had somehow neglected pay $25,000 worth of taxes because of your income, as opposed to a few cents, the IRS *will* hit you like a ton of bricks.
Parent
Re:Mods: I hope you have someone do your taxes (Score:5, Informative)
Wrong.
I hate how this myth keeps getting perpetuated. See my previous explanation [slashdot.org].
--Rob
Parent
Hiring the winner for one flight? (Score:5, Interesting)
He might have to tax the minimum wage, but the company could completely write off the money spent to send him to space in the first place, as it's a work requirement. (i.e. treat the space ride as a "business trip")...
(oh - and yes, if he researches the 'experience' of the offered flights, it should well be possible for him to completely (and determinedly) "enjoy" the flight - so as to be in a better position to say what the company might want to improve for future customers...
Shouldn't that be possible?
Parent
possible loophole (Score:5, Interesting)
If they award him the prize while he's in space, do US tax laws still apply?
Seth
Re:possible loophole (Score:5, Funny)
Parent
Fool... (Score:3, Insightful)
If the guy is worth his salt, and with the publicity he would get from winning the Oracle competition, I see no reason why a decent consultant could not have that paid off in a year.
Re:Fool... (Score:4, Insightful)
Maybe there was a lot of thing that he wanted so badly: like $200,000 sport car, $1,000,000 house,
Also the guy is 31. That means he started to work in the last years of the internet bubble yet, so there is also strong possibilty he had trouble adjusting. I have a colleague here at work that went from a 700GBP/day contract to nothing for a year followed by 300 GBP/day. This worked ok for him but at the same time, there are tons of stories of consultant buying 1,000,000 GBP houses that had a difficult reality check in 2001.
Parent
Re: (Score:3, Insightful)
Oracle should have made him an employee... (Score:5, Funny)
(Disclaimer: I'm not an accountant or a tax geek so I don't know whether that would really work out).
I bet Larry Ellinson is laughing hard (Score:5, Funny)
Unwilling to sink into debt (Score:3, Interesting)
Convergence (Score:5, Funny)
Fortunately, this series eventually converges to values small enough to lose it amid the rounding error on your taxes.
No way. (Score:5, Insightful)
Income? (Score:5, Insightful)
This kind of reminds me of property taxes, where someone walks up to your house, says "I reckons she's worth about this much, so you pay me that much", despite the fact that your house is earning you no income and will be taxed anyway when sold or inherited. It doesn't make much sense.
I'm a believer in financing the state through taxes. But I'm also of the opinion that there should be some kind of logic to tax. Charging people money for something when they haven't actually made any money, or indeed materially benefited in any way, as in this case is like something out of a one dimensional folk tale. When tax is levied, there should always be a question, why is it being levied?
We need taxes. But we also need to remember that the government is not our landlord. It is wrong to have a tax on simply being alive. Tax should be avoidable, if you have no money to pay any.
The Guy's Own Blog Entry (Score:3, Informative)
Saw it referenced several times in the article, but the address was never quoted.
The entry in question is the top one on that page.
Zeno's Paradox reworked (Score:5, Insightful)
Therefore, Zeno might say [wikipedia.org], the swiftest accountant can never overtake the tax man. Thus, while common sense and common experience would hold that a company can pay its taxes, according to the above argument, it cannot; this is the paradox.
That's some Bad Tax Advice (Score:5, Insightful)
As the article and any decent tax account would tell him, he would not be responsible for any tax unless and until he actually accepted the ride into space. This means he could have put off on any decision on whether to accept the prize until the very last minute. At least as far as the tax man is concerned.
The only craft that matches the specs of those announced in the contest press release are those of the Virgin Galactic SpaceShip 2. And since Virgin Galactic's commercial craft is a minimum of 2 years from sending customers into space, he had at least that much time to defer his decision. His financial situation could be much improved by then. Since space craft are rarely delivered on schedule, he would likely have had even more time to defer his decision.
Then there's the possibility that he could have worked his way out of paying much of any tax at all. As others have suggested, if he could have taken some on professional duties in the form of writing about his voyage, he could have partially or wholly written off his tax burden.
So why did this guy refuse the prize two or more years before it would have had any financial impact on him? Why didn't he look into any professional options for writing off the tax? Good question. My guess is either very bad tax advice or sheer lack of courage.
Re: (Score:3, Informative)
Last line from the summary.
Re:About this taxes... (Score:4, Insightful)
Parent
Re:About this taxes... (Score:4, Insightful)
Parent
Re: (Score:3, Informative)
1) the Netherlands is not a "Nordic" country.
2) there's no way that under the Dutch tax system a higher gross pay results in less net income. There used to be one threshold where that effect occurred: when you had to switch from the state health insurance
Pay raises in the Netherlands (Score:5, Informative)
In the 6 years that I've been in the Netherlands (3 as a manager), I've never known anyone to turn down a pay raise. (If you know such people, please let me know... we might want to hire them.) The system does not work as you describe. Making more money always gives you more money.
There may be other reasons to worry about a high income, such as being forced to leave rent controlled housing, but this is not tax related.
Parent
Re: (Score:3, Insightful)
That's an urban myth for people who employ other people who don't understand tax brackets. You can never lose money by increasing your pay unless the higher bracket is taxed at greater than 100%. I seriously doubt that is the case, anywhere!
Re:About this taxes... (Score:4, Insightful)
Parent
Re:About this taxes... (Score:5, Funny)
Parent
Re: (Score:3, Insightful)
Re: (Score:3, Insightful)
When you travel in the US you never know how much it is until you pay. And if you ask beforehand how much the local tax is, they give you nasty looks like you were insulting their dear mothers.
It's a completely braindead system.
Re:American's don't have to pay taxes? (Score:5, Informative)
Prior to 1913 you would be correct; however, quoting the 16th amendment to the US Constituition, "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
Parent