'Free' dinner with Obama could cost you $560

By Jack Minor

The raffles offered by the Obama campaign for dinner with the president may end up costing the winners far more than the $3 they paid to enter the contest.

In an attempt to raise funds, the Obama campaign has taken the step of being the first president in U.S. history to hold a raffle to give ordinary Americans the opportunity to meet with him.

The raffles on the Obama campaign site have asked for a minimum donation of $3 for a chance to have dinner with the president and first lady, Michelle Obama. Those who win are given an all-expense paid trip, including airfare and hotel, to spend the evening with the Obamas.

TRENDING: 'Situation is completely unstable:' Crenshaw tours border, exposes how bad it really is

The most recent raffle dinner will take place on July 13. The campaign website says the total value of the prizes is $4,800, with each entire trip package being worth $1,600. The cost includes two round-trip coach tickets, ground transportation and a one-night stay in a hotel.

While the raffle may initially appear to be a great deal for his supporters, they may be shocked to learn the "free" dinner is anything but. Winners are on the hook for federal, state and local taxes – which could equal up to one-third the cost of the prize.

William Jacobson, associate clinical professor with Cornell Law School, said, "Technically, these raffles are 'sweepstakes' because you can enter without paying anything, although at least a $3 donation is encouraged. This not only adds to Obama's mailing list, it increases the number of donors and lowers the average donation, both of which figures are used in Obama campaign spin.

"So, assuming you take Obama up on his offer to 'cover' airfare, your taxes could be several hundred dollars, depending on your federal marginal tax rate and any state income taxes."

Dennis Kneale, appearing on Fox Business, said the tax could end up being $560 in federal income taxes, depending on the person's tax bracket. With politicians especially, there is no such thing as a free lunch or a free dinner."

The tax liability is not unique. Individuals winning prizes on game shows or similar raffles are equally liable for taxes equal to the value of the prize.

However, for a campaign that claims to be based on small donations from the common man, some might find it surprising that the campaign does not provide a way to pay for the taxes.

Jacobson told WND he is unclear if election law would bar reimbursement for taxes, but noted that "it is common for businesses or others to 'gross up' a payment so that the person receives the net amount after taxes."

Another option would be for the campaign to arrange for an anonymous donor pay the taxes.

Recently, an anonymous donor stepped forward to reimburse costs to Durham, N.H., after the town requested payment from the campaign for a campaign visit by Obama. Some argue there's no reason another donor could not do the same for supporters who win dinner with Obama.