Taxes on Prize Winnings and Inheritance
We all learn at a young age that it isn’t good manners to double dip. If you put that chip back in the salsa after you have taken a bit, you are going to spread germs. For me at least, that principle carries out into regular life. It just isn’t good to double dip. In fact generally, it is unethical or immoral when it comes to business practices or dealings with other people. When it comes to taxes through the government finds no qualms in double, triple or who knows how many dipping into money wherever it changes hands.
Taxes are an easy punching bag, which is likely why I have avoided it as a topic for a bit. I can’t think of anyone, and I mean anyone who likes paying taxes. No matter what country you are from, there is some sort of taxation to fund our governing bodies. It is an unfortunate constant we all experience. It is necessary, don’t get me wrong, I am a realist. But of course, waste in the government makes this bitter pill all the more foul tasting.
I read an article this morning (online of course) titled Uncle Sam Spoils Dream Trip to Space which covers Brian Emmett’s unfortunate situation of not being able to afford to go on his “free” trip he won into space. You see, Brian was just an average Joe computer programmer who won a trip into space. How cool is that?! On top of this, he has always wanted to go into space, even as a child like most young kids. So why isn’t he going you ask? Because he would have to pay $25,000 in taxes to accept the trip. You see the trip is worth $138,000, and because it was won in a prize drawing it must be reported on personal taxes in a category that qualifies for a very large tax penalty. This just doesn’t seem right.
We have all seen this when people win big lottery prizes. Usually, the article announcing the winner talks about how much “take home” prize they actually end up with. It doesn’t seem like as big of a deal because, heck, they just won millions upon millions, so who is complaining. Yet in this situation, how many times has the government collected money on those winnings before even distributing it to this new winner? How many times do they get to stick their hands in the pockets to put the money right back in their coffers?
The prize one really gets me, but not as much as inheritance taxes. Grandma El finally kicks the can, and low an behold the family finds she had nestled away some savings no one knew about. It isn’t that much – nothing to make anyone rich – but enough that everyone is actually a little excited to get it. Then comes the surprise, Uncle Sam is taking a big chunk of it. Depending on how much it is and where you live, the government can take as much as half of it. What kind of business just took place that gives the government the right to get their filthy little hands even dirtier by grabbing a piece of the loot. This tax was really put out there as a way to equalize the rich a bit by not letting subsequent generations simply live off the spoils of being rich…but it doesn’t work. The rich are the ones that can afford to shelter their money in ways that keep the government out of it, so this form of taxation just ends up hurting those that would benefit from a gift left behind from their loved ones.
This puts a whole new spin to the saying, “The only two sure things in life are death and taxes.” Perhaps it should be that “death brings taxes.” Seems like a bad case of adding insult to an already difficult situation.
There has to be a better way for our government to get the cash they need to run. Not only is the US government chewing through every penny they can milk out of the public, but they are running up a tab bigger than any of us can truly fathom With a national debt past 8 trillion, yes trillion, there has to be a change – and quick.
Why can’t the government find ways to generate income to help self fund? I realize ours is a free market society and we don’t want to be competing against a behemoth organization, but I would accept it in some markets and to some degree if it meant a much more beneficial tax situation. Maybe I’m just naive, but there has to be a better way than what we are doing now. Unfortunately, I have little faith that any group in our current governmental setup is going to pull it off. Sure, the Democratic Congress would like you to believe that big changes are underway because they have seized power…and I have a bridge to sell you too. Don’t believe the rhetoric.
I’m a bit cynical on this but cynical with an ounce of hope. I truly hope a better plan can be found within my lifetime, and that things can be fixed. A good start would be to quit raining on the prize-winning parade and pushing down the families with recent deaths. At least we would all be a little happier as a result.