Let's Tax Lottery Winnings at 90%

Great Debates
1

Seems like the perfect win/win: conservatives will like it because it’s increasing taxes on the poor since they’re the ones playing the lottery[sup]1[/sup] [sup]2[/sup] [sup]3[/sup] ; meanwhile liberals will like it because it increases taxes on the newly rich which can be given to the poor.

We’ve already established that money is unearned [from here], so let’s follow through with that.

Last year NY State Lottery paid out about $4billion, of which the federal government takes about 35%. If we up that to 90% the feds get an easy $3.6 billion from NY alone. The Texas State Lottery pays out $2.3billion, so there’s another $2 billion. Right now I’ve sifting through the financial report from the California State Lottery, and it claims they gave out $32.2 billion in prizes. Taxed at 90% that’s almost enough to fund SNAP. PDF of California’s financial report

What could possibly be a downside?

The best part is that if we take 90% of the payouts and give it to the poor they’ll have more money to buy lottery tickets, which goes right back to the government, who can give it out to even poorer people. How’s that for a multiplier!

1 In Texas:
*There’s plenty to suggest that the Texas lottery tends to be regressive, appealing to folks who can least afford it.

While players from high income brackets reported higher participation rates than low income players, low income players spent, for the most part, more money per month.

Players making under $12,000 a year spent three times as much as those pulling in over $100,000 and nearly double those making between $75,000 and $100,000. ($19 a month for the under $12,000 respondents, vs. $6 a month for those over $100,000; and $10 for those earning between $75,000 and $100,000.*

2 In South Carolina
But a review of demographic studies commissioned by the South Carolina Education Lottery, obtained through a Freedom of Information Act request, shows that although low-income and minority groups may not be targeted in the lottery’s advertising, they are more likely than other
—People in households earning under $40,000 accounted for 28 percent of the state’s population, 31.3 percent of lottery players and 53.4 percent of frequent players.

3 In California, 44% of sales are from households earning less than $35k per year (1999 stat)

2

When you win the lottery you are rich, and then congress works for you.

3

So long as the post-tax winnings are what are advertised, sounds fine to me. Otherwise anything past 50% is arguably bait and switch.

4

A large portion of those winnings are small, how would you track and collect on a $20 scratch off ticket?

And why would anybody play?

5

Is this a parody thread?

6

People would stop buying lottery tickets.

Why would we give it to anyone? That is pretty poor stewardship of federal revenue. At least buy infratructure, which creates jobs. The money goes into the economy, the multiplier still works, but we get roads, bridges, water treatment plants etc. for our money, which we don’t get if you just dole it out as welfare. Federal revenue should be used to buy things.

7

Yes, you’ve nailed us conservatives. What an astute observation. We just despise the poor and want to take every last penny from their frail, frozen, malnourished fingers.:rolleyes:

8

Why not? Would you turn down $100,000 because it wasn’t a million? If you’re making $20,000 a year even another $200 is a huge amount of money.

Do companies advertise post-tax salaries? Not sure why this would be any different, I get the sense now that few people realize winnings are taxed at all. Anyone remember the problems Oprah ran into when she gave away cars to her audience?

Nope. Mockery perhaps, but certainly not parody. I’m in total favour of this, and curious to see what sort of downside could possibly exist.

9

emacknight persistently engages in Devil’s Advocate gotcha tactics. He’s fishing for runner pat’s reply of “why would anyone play?” presumably with the intent to point out that high taxes can indeed put a damper on willingness to participate, even when the potential profit is ‘unearned’.

Thing is, 90% is simply confiscatory and there are few who dispute that. I have, however, gladly played the lottery even when assuming the tax bite of the winnings is around 50%, and was actually surprised to learn that it was much less than that.

10

First time in Great Debates?

11

Not when the odds are 174 million to one. People do pay attention the liklihood of winning, and the amount you win/keep. Do you really think they just mindlessly pay a dollar and take whatever they are given?

12

Pretty much. Anyone can play the lottery, and while people are familiar with a paycheck being taxes, winnings are different, and not everyone has that information, easy access to that information, or even the knowledge that such information exists at all.

At the current tax rates, it’s not too bad. Win $50 mil, find out you’re only getting ~$35 mil, things aren’t too different. But someone who wins what was advertised as $50 mil only to discover they’re only getting $5 mil would be understandably upset. Like I said, it’s bait and switch, which is a scummy tactic no matter the scope.

13

Why would they stop playing? They still get plenty of unearned money.

And besides, if fewer people play the odds of wining go up, encouraging people to play.

With the added bonus that buy transferring money to the poor, they’ll have more money to play the lottery.

Nope, tax money is for feeding and educating the poor.

14

How interesting. Proceeds from lotteries in the US in 2006 were 31.5% of the revenue. With 35% being paid out in taxes, about 80% of lottery money is already given to the government. So getting to 90% is only a small increase. That means having the taxes taken before income is distributed is a very good way to collect money. I used to think corporate taxes were a bad idea, but I guess I was wrong.

15

Sez you.

16

Wrong. The odds of picking six numbers is the same, no matter how many tickets you sell.

17

Really? Are you sure? Because I’m pretty sure I’ve been told several times on this message board that tax rates won’t change people’s desire for more unearned money. Getting an extra $100,000 is still desirable and the winner will still be better off. I know people that will work third jobs just for a shot at an extra $200!

Yes I do, but that’s not really the debate here.

18

Nope, but that doesn’t mean I have to abide trite, snide remarks by liberals who assume everyone thinks they way they do.

19

Yeah, it is.

20

No, sez many of the people on this board.

Right, but if more people play more people are likely to also pick some or all of those numbers, dividing the pot.