Friday, September 23, 2016
Wheel of tax
The latest tempest in a taxable teapot concerns a Wheel of Fortune winner named Matt McMahan. He copped $16,400 in cash and (after some finagling) two vacations worth $10,800. This story and a couple others trumpet that he only wound up "$6,000 richer after all his taxes are paid."
Which, if you aren't paying close attention, might make you think that Mr. McMahan got socked with a 78% tax rate on his winnings. ($21,200 in taxes on his winnings of $27,200.)
Well, no. Matt's tax rate was actually a still steep 38%. ($10,400 in taxes on his winnings of $27,200.) Remember that Matt gets to enjoy his trips worth over ten grand, plus the after-tax six grand in cash. It's hardly like he's coming out behind on the deal.
Sure, a tax rate of 38% is still way too high, but what else do you expect from the Feds combining with tax-happy California? Matt, maybe you can get Wheel to move its production to my home state, Texas. There's no state income tax around here.