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United States Space The Almighty Buck

Uncle Sam Spoils Dream Trip To Space 656

Posted by kdawson
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."
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Uncle Sam Spoils Dream Trip To Space

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  • by Whiney Mac Fanboy (963289) * <whineymacfanboy@gmail.com> on Monday January 29, 2007 @06:54AM (#17797514) Homepage Journal
    It may have been a dream dashed for Brian Emmett, but it most certainly was a dream come true for headline writers [google.co.uk]. They leave no cliche unturned:

    * 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 ... the final frontier for space rides
    * Space tourism yet to take off
    * Free trips to space pose some taxing dilemmas

    etc etc etc.
    • Re: (Score:3, Insightful)

      by b100dian (771163)
      Not to mention the obviousness that the state does not help you winning things - therefore one shall not be "taxed" for this
      (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_)
      • by Whiney Mac Fanboy (963289) * <whineymacfanboy@gmail.com> on Monday January 29, 2007 @07:05AM (#17797586) Homepage Journal
        Not to mention the obviousness that the state does not help you winning things - therefore one shall not be "taxed" for this

        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?
        • by b100dian (771163) on Monday January 29, 2007 @07:19AM (#17797648) Homepage Journal
          I disagree - take a look here [wikipedia.org].
          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?
          • Re: (Score:3, 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?

            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.
            • by ktappe (747125) on Monday January 29, 2007 @10:21AM (#17799074)

              Hmmmmmmn. I still don't really see a difference between govt taxing earnings & govt taxing prizes.
              I do. The point of taxes is for the gov't to take a portion of something you win/earn. Taxing him $25K is not taking a portion of his trip, it is taking money he does not and never did have. To me that is not in any way the same thing as the gov't taking a cut of a purely monetary prize and leaving him with the remainder. One scenario leaves him richer and the other leaves him poorer.
              • by MightyYar (622222) on Monday January 29, 2007 @10:39AM (#17799312)
                That would open a huge loophole. I could work for a year at minimum wage in a high-tech job and then get "paid" with a luxury car. In your system, I'd only get taxed for the approximately $5/hr and not the $60,000 luxury car. We don't want to go back to bartering. This bad press should be directed toward Oracle - why wasn't their "free" trip really free?
                • by UbuntuDupe (970646) * on Monday January 29, 2007 @11:34AM (#17800018) Journal
                  Under the scenario you described, you would still be taxed. You'd have to sell the luxury car to get money (people wouldn't completely revert to barter) and that would have to be reported as taxable income. True, with a little work, exempting non-money compensation from taxation *could* gradually lead barter networks to form, but not in the scenario you've described.

                  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.
          • by fatman22 (574039)
            That wouldn't be so bad if the people spending the tax money provided the same value-per-unit-of-local-currency performance as is expected from the people who provide the tax money.
          • by hjf (703092) on Monday January 29, 2007 @10:00AM (#17798840) Homepage
            I live in a country (Argentina) where you have to pay a 21% tax for almost everything you buy (the Value Added Tax, or VAT, just like in the UK). Some items (Such as milk, or curiously, computer parts, have 10,5% VAT, while most others, like TV sets or CAT5 cable, have 10,5% Tax. Finally, Telephone has 27% VAT). That's when you buy something.

            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
            • by Skal Tura (595728) on Monday January 29, 2007 @12:05PM (#17800448) Homepage
              That sounds A LOT like here in Finland, except here isn't that kind of insecurity. Insecurity yes, but not deadly.
              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
              • Re: (Score:3, Funny)

                by Frogbert (589961)

                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.
                Sounds great to me.
        • Tax the organiser (Score:5, Interesting)

          by TapeCutter (624760) on Monday January 29, 2007 @07:29AM (#17797692) Journal
          They attack this problem in Australia (and other places) by taxing the organiser of the lottery, all advertised prizes are for the "after tax" value, if it says "First prize: $1M" and you win, you get $1M. The taxman doesn't hassle you because he took his cut before you got your cheque. Not sure how you would go if you won a foriegn lottery?

          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%.
          • by zCyl (14362) on Monday January 29, 2007 @08:17AM (#17798014)

            They attack this problem in Australia (and other places) by taxing the organiser of the lottery, all advertised prizes are for the "after tax" value, if it says "First prize: $1M" and you win, you get $1M. The taxman doesn't hassle you because he took his cut before you got your cheque.
            That's funny. In the U.S. it's almost exactly the opposite. First, the lottery says "Jackpot prize $15 million" when it is actually $7 million, because they give you the option of taking the $7 million and putting it a fund which pays out 30 annual payments of half a million each. Then the tax comes on top of that. Counting only the federal income taxes and inflated advertising, that means that a jackpot advertised as $15 million comes out to a lump sum of about $4.6 million.
            • Re: (Score:3, Informative)

              by TapeCutter (624760)
              I'm not sure about other states but here in Victoria the state govt takes ~15% of lottery and other major gambling transactions (excluding the stock market ;). The organiser is also restricted on what percentages they can take. In the main the taxation and profit percentages on gambling is fairly transparent and distributed amoungst all players.

              There are a lot more gambling options here than there were 30yrs ago and the state rakes in the revenue. There has been a well publicised "increase in problem gam
      • Re: (Score:2, Insightful)

        The state doesn't help me earn my paycheck, but they tax that. And then I take whatever is left and I invest it, and they tax that. And if I do a lot of that saving, they tax me more.
        Life sucks when you make money. Or win something of value.
        • by mcvos (645701) on Monday January 29, 2007 @08:32AM (#17798092)

          Life sucks when you make money. Or win something of value.

          Life still sucks more when you don't.

        • by Bloke down the pub (861787) on Monday January 29, 2007 @08:50AM (#17798202)

          The state doesn't help me earn my paycheck
          They don't? I guess you built the road you drive on yourself, personally arrested any criminals who might have accosted you during the journey, and convinced everyone to respect private property so your company could exist in the first place.
          • by hackstraw (262471) * on Monday January 29, 2007 @10:02AM (#17798862)
            They don't? I guess you built the road you drive on yourself, personally arrested any criminals who might have accosted you during the journey, and convinced everyone to respect private property so your company could exist in the first place.

            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.

    • by thefirelane (586885) on Monday January 29, 2007 @07:27AM (#17797686)
      Missed the obvious: "There's no such thing as a free launch"
  • by 0rionx (915503) on Monday January 29, 2007 @06:58AM (#17797540)

    ...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.

    • Re: (Score:3, Interesting)

      by niktemadur (793971)
      I mean, we're talking about a trip into space.

      I find it distressing that it took three pages in this thread to touch upon this point.

      A friend of mine took an economy trip to India, and once there, the opportunity arose for her to go to the Himalayas, but to get there, she had to dig into a part of her bank account she hadn't counted on. Stuck in this dilemma, she called her mom for advice ("I gotta pay the rent when I get back, light, water, etc...", you know the drill), and her mom said: "Honey, you're g
  • Discount (Score:5, Interesting)

    by T-Bone_142 (917711) on Monday January 29, 2007 @07:00AM (#17797550)
    What if instead of giving him a free trip they gave him the chance of take a discounted trip, only charging him $1?
    • Re: (Score:2, Interesting)

      by Anonymous Coward
      Not sure about in the US, but here in Australia you are required to charge taxes (the GST) on the value of the item, not on the sale cost of the item. These laws are created to prevent tax avoidance through such schemes as you describe.
      • by beh (4759) * on Monday January 29, 2007 @09:35AM (#17798544)
        There might be another alternative - what about they hire him for the duration of the flight, say, as research for the company doing the rides -- they hire him for minimum wage for one day, and give him some special questionnaire to fill out after the flight. In this case, his ride would be work (gather information on the "end user experience")...

        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?
    • Post below is correct for the US.

      "Discounted" = "Free plus a dollar", right back where he started.

    • Re:Discount (Score:4, Interesting)

      by jamesh (87723) on Monday January 29, 2007 @07:56AM (#17797896)
      I think someone already probably thought of that loophole. Couldn't they hire him in some capacity though? Even if it was just to blog about the experience or something.

      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.
    • by patio11 (857072) on Monday January 29, 2007 @08:40AM (#17798144)
      That would be considered income, because no "arms-length" transaction would have resulted in a sale of a trip into space for $1. Accordingly, the difference between the fair market value and the $1 was a gift to you. Gifts are income. You can even give someone money by not taking money away from them! Observe: I extend my neighbor Bob a loan this year for $5,000. Next year, I say "You know, forget about that loan". BLAM. He has to declare an extra $5,000 (plus fair interest!) in income, and I have to fill out a Form 1099-C attesting to that amount (which, naturally, tips the IRS off to the fact that if Bob doesn't disclose the value of the loan was forgiven to go after him).

      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.
      • by autophile (640621) on Monday January 29, 2007 @10:16AM (#17799016)

        Gifts are income.

        Wrong.

        I hate how this myth keeps getting perpetuated. See my previous explanation [slashdot.org].

        --Rob

  • possible loophole (Score:5, Interesting)

    by SethJohnson (112166) on Monday January 29, 2007 @07:02AM (#17797568) Homepage Journal


    If they award him the prize while he's in space, do US tax laws still apply?

    Seth
    • Yes. (Score:2, Funny)

      by n1hilist (997601)
      If you'd been following the recent story regarding China's lil' missile they used to destroy an old weather satellite, and then saw US's reaction and statement about it you'll know that America owns space, and possibly everything. :)

      Besides, they are already floating lawyers floating in space, waiting.
    • by will_die (586523) on Monday January 29, 2007 @07:37AM (#17797758) Homepage
      Yes, however if he spend 330 days out in space then he would get the expat tax break.
  • Fool... (Score:3, Insightful)

    by D-Cypell (446534) on Monday January 29, 2007 @07:03AM (#17797574)
    I find it unbelievable that a 'software consultant' cannot stomach a $25'000 fee for something he wanted so badly. TFA even says he would have a strong case not to pay until he receives his flight, and could pay in installments.

    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)

      by gutnor (872759) on Monday January 29, 2007 @07:21AM (#17797654)
      "I find it unbelievable that a 'software consultant' cannot stomach a $25'000 fee for something he wanted so badly"

      Maybe there was a lot of thing that he wanted so badly: like $200,000 sport car, $1,000,000 house, ... Regarless of how much you earn, you goes into debt when your lifestyle cost you more that what you make.

      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.
    • Re: (Score:3, Insightful)

      by Chanc_Gorkon (94133)
      25000 is alot of money for anyone but the rich. 25,000 is a car! When was the last time you bought a car with cash??
      • Oddly enough, just about 4 years ago. Toyota Tacoma TRD. Cash on the barrel.

        Previous truck had just rolled 10 years, might have had something to do with the ability.

  • by adnonsense (826530) on Monday January 29, 2007 @07:04AM (#17797576) Homepage Journal

    ...then they could say they were sending him on a business trip and file it under expenses. ("Reason for trip: To boldly go where no DBA has gone before, to seek out new tablespaces and discover new, alien forms of indices").

    (Disclaimer: I'm not an accountant or a tax geek so I don't know whether that would really work out).

  • by Anonymous Coward on Monday January 29, 2007 @07:04AM (#17797578)
    So am I. Is the consolation prize a sheet of acid tabs and a DVD of 2001? It always works for me.
  • by farker haiku (883529) on Monday January 29, 2007 @07:11AM (#17797608) Journal
    Yeah, I'm sure he had a problem affording it... but I'd have gone even though that's a substantial portion of my yearly salary. The only thing I can think of is that he might have been in the middle of a divorce - and if his salary was reported to be 138k higher per year, then his soon to be ex might have a much higher alimony. One that he couldn't afford to pay.
  • Convergence (Score:5, Funny)

    by Dachannien (617929) on Monday January 29, 2007 @07:14AM (#17797618)
    Some contest sponsors provide a check to cover taxes, but that income is also taxable.

    Fortunately, this series eventually converges to values small enough to lose it amid the rounding error on your taxes.

    • by abigsmurf (919188)
      Greek philosophers have proven that Americans actually pay infinate tax on prizes. You get money, you get a tax bill for that money, you get sent more money to cover the taxes, get a tax bill for that, get sent more money to cover the tax....
    1. Get a mailbox somewhere in Europe. Say, at a friends place. I can't think of a country where lottery winnings are taxable over here.
    2. Use that address to enter contests.
    3. Pray nobody finds out you don't actually live there :)
    • by 1u3hr (530656)
      Pray nobody finds out you don't actually live there :)

      Right. Because there won't be any publicity, will there?

      Ask Richard Hatch [thesmokinggun.com] how that works.

  • So are they going to start charging astronauts $25000 too?

  • the negative effect of taxes on the economy. While this example is extremely exaggerated, the same thing happens countless times on a much smaller scale every day - I don't buy that shirt, for example, because taxes make the price $22 instead of $20. An otherwise mutually-beneficial transaction is lost.

    Studies indicate that about fifteen cents are lost this way for every dollar the government collects for the major taxes (income, sales, property). That implies that the we have to spend a $1.15 just to
    • Re: (Score:3, Insightful)

      by Angstroem (692547)
      Boy, would I love to have just 10% sales tax. In Germany, they just cranked it up to 19% this January.
      • Re: (Score:3, Insightful)

        by Fred_A (10934)
        At least in Germany (or in the rest of the world for that matter), the sales tax is part of the price of the item.
        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.
        • by Angstroem (692547)
          Not sure whether it is brain-dead. In a world of gross-pricing you also never know how much of tax is on it -- too few people have a look at the end price to see how much tax is included. That makes it easier for politicians to raise taxes because the constant "darn, it said it costs $X, but I had to pay $X*1.2 in the end!" feeling is missing.

          Besides, in the US you have this wonderful law so that you have to pay no sales tax on trans-state sales (at least true for mail/internet orders), so apart from you
        • by c6gunner (950153)
          Not "the rest of the world". Sales tax in Canada is never included in the price. I'm sure there are other countries where it's the same. Granted, it was inconvenient until I learned some basic math, but the other poster hit it exactly - when taxes are part of the advertised price, it becomes much easier to raise taxes.
    • When anyone starts a point with "studies show..." you can be sure the author is full of shit. What studies? Who's studies? And show my a study by respected economists, not some crap on a nutball website.

      Obviously nobody *likes* taxes, for Chrissakes, but there seems to be little alternative for government fundraising unless you think people will make donations, which I believe rather unlikely.

  • No way. (Score:5, Insightful)

    by GregoryD (646395) on Monday January 29, 2007 @07:28AM (#17797690)
    I call BS. I don't think he wanted to go in the first place. Nobody with a dream of space flight would pass this up. I'm a freaking grocery/dept store clerk and I could put 31k on a credit card. Sure that is really dumb thing to do, but man, this is for space. While working my butt off for the next billion years to pay it off, I could have one heck of a story to tell.

    • by finkployd (12902)
      Maybe he has a family to think about and doesn't want to #$%@ up their future for a short term thrill?

      I sure as heck would not pay 31k for a quick space flight, that is four years of college tuition right there.

      Finkployd
  • FTA: ...report the $138,000 galactic joy ride as income...
    I heard American's don't have to pay income taxes, in this documentary, America - Freedom to Fascism.
    It's got an interview with a lady who was on a jury and neither the prosecutor or judge could state the law that says a person has to pay income tax. So the jury found 'not guilty'. America - Freedom to Fascism [thepiratebay.org]
    Disclosure: I'm Australian, I don't pay American taxes anyway.
    • by will_die (586523)
      Anytime you see America or Australia compared to fascism you should take the author as a joke.
      Unfortunarly you have to pay income taxes in the US, we even have pay taxes if we earn the money in other countries.
      You only need to look at all theses [irs.gov] people to see that the US government will force you to pay taxes.
    • To quote the Sixteenth Amendment to the United States Constitution:

      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.

      Ratified 02/13/1913

  • Some contest sponsors provide a check to cover taxes, but that income is also taxable.

    It's a kind of infinite recursive descent to RUIN!

  • Income? (Score:5, Insightful)

    I fail to see how a free trip to space equates to income. Yes, the trip ordinarily costs $138,000, but this paticular trip was priced at "Win this competition". That doesn't have any monetary value. X% of "Win this competition" is not equal to $25,000. As others have mentioned, the company could also have priced that paticular seat at $1 and been well withing their rights. This story seems bogus.

    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.
    • by 1u3hr (530656)
      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?

      The trip is valued at $138,000. Whether he can resell it or not is not the IRD's problem. It's not a profit ta

    • by mapkinase (958129)

      or indeed materially benefited in any way
      You gotta be kidding. How is the adventure of the life time is not a material benefit?
    • I fail to see how a free trip to space equates to income. Yes, the trip ordinarily costs $138,000, but this paticular trip was priced at "Win this competition". That doesn't have any monetary value.

      Frankly, I don't see how it equates to income either, and I'm a tax specialist. If the trip was transferable then you could argue for it being income, but then the guy would have been an idiot to give it up when he could have just sold it. But a completely intangible prize like a trip to space, where the priz

  • Ah, I love Canada (Score:2, Informative)

    by xiang shui (762964)
    ...he wouldn't have had to pay a dime, Up North. Gifts or prizes are _not_ taxable.
  • by Anonymous Coward on Monday January 29, 2007 @07:48AM (#17797834)
    http://www.eminentbrain.com/ [eminentbrain.com]

    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.

  • by erroneus (253617)
    He might have started some sort of charity thing and solicited donations and collected via eBay. He would have had a whole year + extensions after the trip or something along those lines to make it all happen. You think there aren't 25,000 sympathetic geeks all over the world who wouldn't have given a dollar to let this guy go into space? I would have. I'd kick in more.
  • I think he's getting off lucky. The IRS might suddenly decide that the company is underestimating the value of the trip, and place its value at $20M US, which up to now has been the going rate. There - pay taxes on THAT! ;)
  • Sponsors (Score:2, Funny)

    by Joebert (946227)
    I'm sure the Porn industry would pay 25K for the only video in existance of someone whackin in space.
  • Oracle. They should have paid the taxes as well. It was very obvious from the beginning that Uncle Sam would lay his long bony arms on this.

    BTW, it is not too late for Oracle to do it now.
  • No free spaceflight?

    If I buy someone a plane ticket to come visit me, they're not taxed for it as income.

    If Oracle buys this dude a spaceflight, why should he pay tax on it? /me confused
  • by giafly (926567) on Monday January 29, 2007 @08:40AM (#17798138)

    Some contest sponsors provide a check to cover taxes, but that income is also taxable.
    If a company tries to award a tax-paid prize, it can never do so, because each time it pays off the tax this leads to extra tax being owed.

    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.
  • by Mal Reynolds (676267) <Michael_stev80.hotmail@com> on Monday January 29, 2007 @08:43AM (#17798152)
    This guy either had very bad tax advice or is using the tax code as an excuse to wimp out of a somewhat dangerous experience.

    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.
  • by brunes69 (86786) <slashdot AT keirstead DOT org> on Monday January 29, 2007 @08:44AM (#17798166) Homepage
    If he had moved to Canada just before the drawing, and won the contest while living and working there, the contest would not be taxable, since Canada does not tax lottery or gambling winnings, unless they are your "primary source of income" (i.e. unless you're a professional gambler / poker player / etc).

    I mean, after all, how often do you get to go into space?

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