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By Susie Poppick
July 9, 2014
Let them eat... potato salad?
Let them eat... potato salad?
Denise Bush—Getty Images

Perhaps you’ve heard about the Kickstarter campaign to raise funds to make some potato salad. It started as an attempt at irony but has now raised more than 70,000-completely-serious-dollars — inspiring awe, anger, less-successful copycats and plenty of jokes.

For those wondering where all that money will go, the Tax Foundation has an (at least partial) answer: The taxman.

According to the think tank’s calculations, project founder Zack Danger Brown should owe federal taxes of $8,632, Columbus city taxes of $1,510, Ohio state taxes of $1,712, plus $9,313 in payroll taxes. That all adds up to a whopping $21,167 — and that assumes donations stop after $70,000. (Spoiler alert, the total figure has already jumped $1,000 in the last couple of hours.)

The reason for this big bill is that funds raised on Kickstarter are considered income and can generally be offset only by expenses directly related to the project.

So unless Brown is adorning his potato salad with Wagyu beef, white truffles, and gold leaf, he could be looking at a 32% effective tax rate.

If he does as many are suggesting and donates any leftover cash to charity, he might be able to offset some of that with a charitable contribution deduction — though the Tax Foundation says he’ll still be liable for payroll taxes.

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Our mission is to help people at any stage of life make smart financial decisions through research, reporting, reviews, recommendations, and tools.

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Our content is free because our partners pay us a referral fee if you click on links or call any of the phone numbers on our site. If you choose to interact with the content on our site, we will likely receive compensation. If you don't, we will not be compensated. Ultimately the choice is yours.

Opinions are our own and our editors and staff writers are instructed to maintain editorial integrity, but compensation along with in-depth research will determine where, how, and in what order they appear on the page.

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