# Let's Tax Lottery Winnings at 90% **URL:** \ **Category:** Great Debates\ **Created:** [July 15, 2011, 9:09pm UTC](https://boards.straightdope.com/t/lets-tax-lottery-winnings-at-90/589175 "2011-07-15T21:09:10Z")\ **Posts on this page:** 20\ **Page:** 7
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [July 19, 2011, 10:22pm UTC](https://boards.straightdope.com/t/lets-tax-lottery-winnings-at-90/589175/121 "2011-07-19T22:22:04Z")
> [@emacknight](#): > > No one? > > [Taxes: a scale of moral](http://boards.straightdope.com/sdmb/showthread.php?t=615272) > > [Whence comes wealth?](http://boards.straightdope.com/sdmb/showthread.php?t=615853) > > [Why are the rich so opposed to paying taxes?](http://boards.straightdope.com/sdmb/showthread.php?t=616423) Yeah noone. Noone is saying we should increase the tax rate to 90%. > [@](#): > > Lots of threads right now involving increasing the top marginal tax rate, to 90%? Cite please or remove that straw man from my sight. > [@](#): > > and each time a conservative mentions that it will hurt investments. Each time a liberal insists that it won’t, that if a person wants more money they’ll open another store, regardless of the tax rate on their next million. Even if they don’t, someone else will. Someone else tries to explain risk, and the thread deteriorates into another bitch-fest about libertarians. If the expected return is positive then someone WILL open that store. Its not that people don’t understand the concept of risk, its that you don’t seem to understand any concept other than risk. > [@](#): > > So instead of talking about progressive taxes, the rich, and investments, we look at it from a different angle. Will people risk their money to play the lottery if we change the potential payout? Not the odds of winning, but the benefits derived. As you said, the odds of picking the right power ball number doesn’t change, but instead of $1million you only end up with $100,000. Once again, you seem to be the only one proposing a 90% tax. > [@](#): > > Within so many of the tax threads it is eventually pointed out that the top marginal tax rate was 91% back in the 50s and everything was great. I think this is where we point out the difference between earned income and gambling. Back when the top marginal rates were at 92%, CEO salaries were significantly lower and yet we didn’t have any trouble getting the best and brightest striving to become CEOs. > [@](#): > > We’ve tried, it turns into the same threads as those linked above. How are people supposed to understand the laffer curve if they don’t realize that people won’t risk money if the payout changes? You realize the most aggressive plan out there is to return to the tax rates we had under Clinton, don’t you? I think it is hard to argue that those tax rates stifled economic activity. The bright side was that we also had enough tax revenue to pay for government. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [July 19, 2011, 10:27pm UTC](https://boards.straightdope.com/t/lets-tax-lottery-winnings-at-90/589175/122 "2011-07-19T22:27:01Z")
> [@Bosstone](#): > > The point of the Laffer curve is that if you’re on the low end, raising taxes can actually _help_. If it didn’t, it wouldn’t be a curve, just a slope. > > You’re failing to draw a distinction between moderate tax raises (\<10%) and skyrocketing to confiscatory levels. Yes, good for you, you found someone who said 75%. That doesn’t mean everyone who thinks a tax increase is necessarily thinking 75% or more. > > There’s also the point to be made that investments are typically _substantially_ higher on the expected return than a lottery. Even now, you can pretty much guarantee a safe 3% return on investment barring a complete collapse of the economy. If I can dump 1 million into a fund and be guaranteed 30,000 a year for basically doing nothing but having a lot of money, that…really isn’t anything like a lottery that offers a 1 in 195 million chance to win. If I’m playing those long odds, even at $1 a try, I’m reasonably going to expect a bit more of a payout than $100,000. I thought the Laffer curve was entirely about the relationship between tax rates and tax revenue. At a rate of 0% you get $0 in taxes because you don’t collect any money. At 100% you collect $0 because there isn’t any money to collect. At some point you reach a point where increasing the tax rate will not increase tax revenue. This was an important part of conservative ideology because they wanted to reduce tax rates but didn’t want to cut and spending when they realized that any spending cuts would have to come from medicare or defense because Reagan had pretty much cut most of the fat from the government already (seriously, there are people who are highlighting cutting shit like the ATF as if that’s even one percent of one percent of our deficit) but they wanted to cut taxes anyways. The only way they could justify it was by saying that the tax cuts would result in even higher tax revenue. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [July 19, 2011, 10:34pm UTC](https://boards.straightdope.com/t/lets-tax-lottery-winnings-at-90/589175/123 "2011-07-19T22:34:04Z")
> [@emacknight](#): > > The main point of the Laffer Curve is that you don’t know where you are on the curve, or what shape the curve actually is. It’s very erroneously drawn as if it goes smoothly from 0% to 100% tax rates. Its pretty much accepted by most reputable economists that we are on the left hand side of the laffer curve. ie an increase int ax rates will result in an increase in revenues. If you’ll notice, noone is even trying to claim that increasing tax rates will lower government revenue. > [@](#): > > People definitely wouldn’t play the lottery if a $1 ticket won then $1.03, no matter how guaranteed. If it was 100% guaranteed, I would play a million of those tickets every week. > [@](#): > > Now this last statement is the point of this debate. For the 1 in 195 million chance to win 90% tax rate is way too much, s translate that into a investment risk. An millionaire entrepreneur that wants to open another store is gambling. She’s about to put up hundreds of thousands of dollars to make another million dollars. If we increase the tax on that next $1million, it should seem intuitively obvious to everyone she’ll be less likely to take the risk. > > Instead we need to demonize the entrepreneur, diminish her efforts, call her greedy, call her selfish, and then increase the top marginal tax rate. You are positing a stifling tax environment. We are proposing CLinton era tax rates. If you point is that even a 1% increase in taxes is going to have some marginal effect on investment decisions, then fine but recognize that the money does not evaporate into thin air when it is taxed, it is either reinjected into the economy or it is used to pay down debt. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [July 19, 2011, 10:37pm UTC](https://boards.straightdope.com/t/lets-tax-lottery-winnings-at-90/589175/124 "2011-07-19T22:37:19Z")
> [@Sam\_Stone](#): > > Of course the market is constrained by what’s fair, because there is competition. Why do you think the average vig for blackjack is only about .7%? When governments keep 30-50% of lottery ticket sales, private casino games can be found with house vigs as low as .2%, and the average for private slot machines is 0-8%. > > I used to play poker in an underground club that was completely unregulated - the house collected a far smaller vig than the government-regulated casino down the street, which is why we all went there. > > If profits are the only thing that matters and fairness doesn’t enter into it, how could that possibly happen? nit: I think vig is different than rake. Poker tables have a rake. Bookies and loan sharks have a vig. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [July 19, 2011, 10:43pm UTC](https://boards.straightdope.com/t/lets-tax-lottery-winnings-at-90/589175/125 "2011-07-19T22:43:45Z")
> [@emacknight](#): > > That’s all I really needed to show, now it’s a question of what is considered confiscatory. Obviously 90% is, 35% isn’t. Looking back through [history](http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=213) it was actually 91% in the 50s, 70% in the 70s, 50% under Reagan, and 40% under Clinton. Nit: Clinton raised taxes. Taxes were at 28% when Reagan left office and we were running historic deficits. HW Bush raised taxes some in between. > [@](#): > > Increasing taxes on the rich actually means increasing the top marginal tax rate, which will have the effect of reducing participation. Yeah, but not by a whole lot. > [@](#): > > It’s entirely possible that higher tax rates might increase government revenue, while at the same time inhibiting job creation. Yes, which is why the Laffer curve is not really a very good instrument for measuring what we seem to want to measure. Its like taking someone’s temperature with a ruler. > [@](#): > > So with unemployment still high, are you willing to risk stalling job creation? Do you think that cutting spending will have any less deleterious effect? People are not sitting on their money because taxes are too high, they are sitting on their money because economic activity is too low. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [July 19, 2011, 10:45pm UTC](https://boards.straightdope.com/t/lets-tax-lottery-winnings-at-90/589175/126 "2011-07-19T22:45:58Z")
> [@Der\_Trihs](#): > > The “Laffer Curve” is a joke. It’s just a propaganda tool used by the Right to justify cutting taxes on the rich. Somehow, we always just happen to be on the “taxes too high on the rich” end of the curve. > > In reality, no one knows where we are on the curve, or even what shape it is. It’s useless. I think there is probably concensus that we are on the left hand side of the curve. > [@](#): > > Are you willing to risk stalling job creation by keeping taxes low? After all, low taxes for the rich means that consumers have no money to get our consumer driven economy running, and there’s no reason to hire when there’s no demand for any products you make because people can’t afford them. Heavily tax the rich, hand out their money to the common people to get the economy going and boost job creation. Well, can’t we at least get them digging ditches or something? ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [July 19, 2011, 11:19pm UTC](https://boards.straightdope.com/t/lets-tax-lottery-winnings-at-90/589175/127 "2011-07-19T23:19:12Z")
> [@emacknight](#): > > Bit of a chicken and egg situation. Not really. In the current situation, stimulating investment to accelerate the economy is like trying to push a rope. > [@](#): > > Oddly enough, even in a shitty economy people still _want_ to spend, they line up at 4am and trample people to do it. The economy can’t run on Harry Potter movies and iPad 2s. > [@](#): > > There is always demand, but it becomes a question of price (obviously). Do you know what the definition of a recession is? The market pricing mechanism can break down. > [@](#): > > Adding taxes on top of what is obviously low demand cuts further into it. I don’t particularly want to raise taxes but if given a choice between raising taxes on upper incomes and cutting spending during a recession, I want to raise taxes. > [@](#): > > You can, but that means you acknowledge that some of your entrepreneurs are refusing to participate because of the tax burden. You bow to them when it becomes too many and your economy stalls. Lack of investment is not what is stalling our economy. Recessions are often identified by excess production capacity. We don’t need more Burger King’s we need more people buying Whoppers meals. We shouldn’t be bowing to Burger King franchisees, we should be bowing to the fat kid waiting in line waiting to get a happy meal. > [@](#): > > Gladly. To be fair, you have never complained about your own taxes. I think your libertariansim comes from naivete not greed. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [July 20, 2011, 10:44pm UTC](https://boards.straightdope.com/t/lets-tax-lottery-winnings-at-90/589175/128 "2011-07-20T22:44:49Z")
Holy crap, that has to be a new record for consecutive posts. "I don’t particularly want to raise taxes but if given a choice between raising taxes on upper incomes and cutting spending during a recession, I want to raise taxes. " I’d rather not do either, but the US is in a particularly fucked position with respect to three years of recessions and a massive deficit. And let’s be clear about something: this isn’t about party politics, I don’t give a rats ass which way you vote. As far as I can tell, the US has run out of available credit. Even if the debt ceiling is raised tonight we’ll still be in the same mess tomorrow. Both the Bush tax cuts, and the Obama stimulus were deficit financed and failed to deliver. The “demand” either of those were supposed to create failed to materialize. ---
**Author:** ![SenorBeef](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/senorbeef/32/2220_2.png) [@SenorBeef](https://boards.straightdope.com/u/SenorBeef)\ **Post date:** [July 20, 2011, 10:48pm UTC](https://boards.straightdope.com/t/lets-tax-lottery-winnings-at-90/589175/129 "2011-07-20T22:48:59Z")
The US hasn’t run out of credit - countries will still loan us all the money we want if we don’t default. Also, the bush tax cuts are a reversible policy, and the stimulus money is spent. So at least one of those things we can fix. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [July 20, 2011, 10:57pm UTC](https://boards.straightdope.com/t/lets-tax-lottery-winnings-at-90/589175/130 "2011-07-20T22:57:23Z")
> [@BrightNShiny](#): > > You are trying to have it both ways in this thread. Quite the opposite. All I did was make a simple proposal, “Let’s tax lottery winnings at 90%.” And this was met with several people responding, “Why would they bother playing?” For some reason, when I propose we increase the tax ration on lottery winnings, the intuitive response is that fewer people would participate. Yet when discussing an increase on the top marginal tax rate, what should have been the same intuitive response is some how absent. In fact, it’s 180[sup]o[/sup]. Many on this board actually believe that those being taxed won’t alter their behaviour, and that the government can redistribute money to come out ahead. That is trying to have it both ways. What’s amusing is that lottery players are anything but rational, and it’s just as likely that raising the tax rate on them would do nothing. While I’d like to believe those in the top marginal tax rate a just ever so slightly more rational when it comes to investing. There are plenty of jokes to be made about what the rich spend their money on, but I think it’s safe to say that tax \*\*avoidance \*\*plays a role, and that is ultimately the point of this discussion. > [@BrightNShiny](#): > > On the one hand, you want us to assume that investors make perfectly rational calculations based on tax rate. No, not perfectly. Are you trying to suggest that taxes are not factored in to investment decisions? ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [July 20, 2011, 10:58pm UTC](https://boards.straightdope.com/t/lets-tax-lottery-winnings-at-90/589175/131 "2011-07-20T22:58:23Z")
> [@SenorBeef](#): > > The US hasn’t run out of credit - countries will still loan us all the money we want if we don’t default. > > Also, the bush tax cuts are a reversible policy, and the stimulus money is spent. So at least one of those things we can fix. Sure, and so would a loan shark, but that still has to be paid back at some point, right? What is the point of borrowing more money without any plan for how to pay it back? ETA And the cost will increase the more we borrow. ---
**Author:** ![SenorBeef](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/senorbeef/32/2220_2.png) [@SenorBeef](https://boards.straightdope.com/u/SenorBeef)\ **Post date:** [July 20, 2011, 11:00pm UTC](https://boards.straightdope.com/t/lets-tax-lottery-winnings-at-90/589175/132 "2011-07-20T23:00:52Z")
It’s not accurate to say “we’ve run out of credit” if countries will loan us trillions more if we just ask. It’s not like we’re a minimum wage worker taking out a $90,000 loan to buy an Aston Martin. If we want to pay off the debt, we could, there’s just no stomach for the tax increases to do so. I’m also sort of puzzled that you just sort of offhandedly remarked that the Bush tax cuts failed to grow our economy. Isn’t the whole premise of your thread that tax cuts = economic boom, tax increases = crippled economy? ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [July 21, 2011, 3:04am UTC](https://boards.straightdope.com/t/lets-tax-lottery-winnings-at-90/589175/133 "2011-07-21T03:04:40Z")
> [@emacknight](#): > > Holy crap, that has to be a new record for consecutive posts. > > "I don’t particularly want to raise taxes but if given a choice between raising taxes on upper incomes and cutting spending during a recession, I want to raise taxes. " > > I’d rather not do either, but the US is in a particularly fucked position with respect to three years of recessions and a massive deficit. > > And let’s be clear about something: this isn’t about party politics, I don’t give a rats ass which way you vote. As far as I can tell, the US has run out of available credit. Even if the debt ceiling is raised tonight we’ll still be in the same mess tomorrow. > > Both the Bush tax cuts, and the Obama stimulus were deficit financed and failed to deliver. The “demand” either of those were supposed to create failed to materialize. Failed to deliver? You mean the stimulus didn’t magically change the economy’s vector from freefall to bubble? Or are you trying to imply that merely bring us back from the brink of ruin proves that Keynesian economics doesn’t work? Even Libertarians generally don’t deny the stimulative effect of deficit spending, are you going one step further and saying that Keynes was full of shit? eta: and sorry for the chainposting. I can’t multiquote and there was a lot of stuff that deserved a response. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [July 21, 2011, 3:11am UTC](https://boards.straightdope.com/t/lets-tax-lottery-winnings-at-90/589175/134 "2011-07-21T03:11:51Z")
> [@emacknight](#): > > Quite the opposite. All I did was make a simple proposal, “Let’s tax lottery winnings at 90%.” > > And this was met with several people responding, “Why would they bother playing?” > > For some reason, when I propose we increase the tax ration on lottery winnings, the intuitive response is that fewer people would participate. No, you didn’t propose an increase in the tax rate for lottery winnings, you proposed a confiscatory tax rate for lottery winnings. If you had said, lets tax lottery winnings at 39.6% instead of 35%. What do you think the response would have been? > [@](#): > > Many on this board actually believe that those being taxed won’t alter their behaviour, and that the government can redistribute money to come out ahead. They won’t alter it by much if you raise the top marginal rate from 35 to 39.6. After all Clinton raised it from 31% to 39.6% and he presided over some reasonably good economic growth. > [@](#): > > No, not perfectly. Are you trying to suggest that taxes are not factored in to investment decisions? a 4.6% difference in the top marginal tax rate wouldn’t make much of a difference. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [July 21, 2011, 3:23am UTC](https://boards.straightdope.com/t/lets-tax-lottery-winnings-at-90/589175/135 "2011-07-21T03:23:10Z")
> [@emacknight](#): > > Sure, and so would a loan shark, but that still has to be paid back at some point, right? > > What is the point of borrowing more money without any plan for how to pay it back? > > ETA And the cost will increase the more we borrow. Here is a fun fact, America has been in debt since the Revolutionary War. We can continue to be in debt for the rest of time. Here is another fun fact. Over the last few years during which time we have borrowed about half our GDP, we have actually been able to float our debt for increasingly less and less interest. We have to pull ourselves out of this mess and have a plan for paying down our debt and increasing taxes should be part of that plan. ---
**Author:** ![BrightNShiny](https://avatars.discourse-cdn.com/v4/letter/b/7bcc69/32.png) [@BrightNShiny](https://boards.straightdope.com/u/BrightNShiny)\ **Post date:** [July 21, 2011, 7:19am UTC](https://boards.straightdope.com/t/lets-tax-lottery-winnings-at-90/589175/136 "2011-07-21T07:19:50Z")
> [@emacknight](#): > > Quite the opposite. All I did was make a simple proposal, “Let’s tax lottery winnings at 90%.” > > And this was met with several people responding, “Why would they bother playing?” > > For some reason, when I propose we increase the tax ration on lottery winnings, the intuitive response is that fewer people would participate. > > Yet when discussing an increase on the top marginal tax rate, what should have been the same intuitive response is some how absent. In fact, it’s 180[sup]o[/sup]. Many on this board actually believe that those being taxed won’t alter their behaviour, and that the government can redistribute money to come out ahead. Oh, are we doing economics on a popular poll now? I thought you might actually have some economic insight you were trying to share. Apparently, all you were doing was trying to play a game of “gotcha.” Why didn’t you just say that from the beginning? And, of course, I notice that you neatly managed to sidestep my argument by pointing to what other posters were doing. That must be because you don’t have an actual response to my arguments. > [@](#): > > What’s amusing is that lottery players are anything but rational, and it’s just as likely that raising the tax rate on them would do nothing. And here is the evidence that you were trying to play “gotcha” rather than have a serious economic debate. Not everyone gets to study economics (and I’m beginning to suspect that you are one of those people). You might try actually informing people, rather than trying to put one over on people who can’t wade through a model. > [@](#): > > While I’d like to believe those in the top marginal tax rate a just ever so slightly more rational when it comes to investing. There are plenty of jokes to be made about what the rich spend their money on, but I think it’s safe to say that tax \*\*avoidance \*\*plays a role, and that is ultimately the point of this discussion. Oh, that was your point? I think not. If that was your point, you would have started a thread on the best strategies to mitigate tax avoidance. You don’t care about tax avoidance, you want to play “gotcha” games and well… I’m not sure what else the purpose is here. > [@](#): > > No, not perfectly. Are you trying to suggest that taxes are not factored in to investment decisions? Hee! I don’t know whether to think you are being intentionally ridiculous or ironic or if you actually have poor reading comprehension. It’s like you are a parody of a libertarian. Go read my post #100 for an answer to that question. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [July 21, 2011, 9:57pm UTC](https://boards.straightdope.com/t/lets-tax-lottery-winnings-at-90/589175/137 "2011-07-21T21:57:57Z")
> [@SenorBeef](#): > > It’s not accurate to say “we’ve run out of credit” if countries will loan us trillions more if we just ask. It’s not like we’re a minimum wage worker taking out a $90,000 loan to buy an Aston Martin. If we want to pay off the debt, we could, there’s just no stomach for the tax increases to do so. Or to cut spending… > [@SenorBeef](#): > > I’m also sort of puzzled that you just sort of offhandedly remarked that the Bush tax cuts failed to grow our economy. Isn’t the whole premise of your thread that tax cuts = economic boom, tax increases = crippled economy? No, that’s the sort of retarded and simplistic thinking that gets countries/companies/people into messes like this. Just as saying spending cuts = people dying in the streets, spending increases = utopia for all. The point of this thread isn’t to be against tax increases, or for tax cuts. Simply put, it’s to remind people that there are consequences for the decisions they make. Raising the top marginal tax rate 1% or 65% will have consequences. Cutting spending received by the bottom 20% will also have consequences. But it’s the former that is so often overlooked while people bitch about the latter. To the rest of the crowd: [This chart](http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&ctype=l&strail=false&nselm=h&met_y=ny_gdp_pcap_cd&scale_y=lin&ind_y=false&rdim=country&idim=country:USA:CAN&tstart=-298148400000&tend=1279688400000&hl=en&dl=en&uniSize=0.035&iconSize=0.5&icfg) shows comparative gdp per capita between the US and Canada. See that looooong flat part from 1991 to 2001? That was when Canada made massive spending cuts (that included cuts to health care), held taxes (in some cases raised them higher), and balanced the budget. That’s what happens to gdp growth when government shrinks a deficit, consequences of actions. And then look from 2002 until 2007, that was real GDP growth based on a solid foundation with a balanced budget. During that time the government both cut taxes, and also increased spending, as revenue grew with increased gdp. ---
**Author:** ![Bosstone](https://avatars.discourse-cdn.com/v4/letter/b/22d042/32.png) [@Bosstone](https://boards.straightdope.com/u/Bosstone)\ **Post date:** [July 21, 2011, 10:04pm UTC](https://boards.straightdope.com/t/lets-tax-lottery-winnings-at-90/589175/138 "2011-07-21T22:04:57Z")
> [@emacknight](#): > > Or to cut spending… Try to cut spending below current revenue. Just try. I dare you. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [July 21, 2011, 10:14pm UTC](https://boards.straightdope.com/t/lets-tax-lottery-winnings-at-90/589175/139 "2011-07-21T22:14:32Z")
> [@Damuri\_Ajashi](#): > > We have to pull ourselves out of this mess and have a plan for paying down our debt and increasing taxes should be part of that plan. Of course, and all I ask is that people realize what increasing the top marginal tax rate actually means. > [@Damuri\_Ajashi](#): > > No, you didn’t propose an increase in the tax rate for lottery winnings, you proposed a confiscatory tax rate for lottery winnings. If you had said, lets tax lottery winnings at 39.6% instead of 35%. What do you think the response would have been? Ah yes, that word, confiscatory, which only gets applied arbitrarily to numbers that sound high. Do I really have to link to historical top marginal tax rates again? As to your second question, the responses would have been a garbled mess of confusion, because for some reason it confuses people to think in small terms. 90% is obviously confiscatory and will stop people from playing 39.6% is confusing, people don’t know what the current rate is, some think it’s confiscatory, others think it’s too low 35% would have been funny people that’s the current rate and few people know that, so some would say, “why would they play” and others would say, “there would be a mad rush for tickets” The error in your application of going from 35 -\> 39.5 is that you’re trying to look conclude that an infentesably small number won’t have a downside, so then make that number a little larger, and a little larger. I went the other way and jumped straight to 90% which is obviously confiscatory, now we move smaller. What if I said 80%? 70%? 60% So what we get is this weird gap. Increasing by 1% does nothing, but increasing by 64% shuts it all down. Problem is that if we say 2% vs 64% we get the same answer, ditto for 3 and 60. We can then project convergence at a number were two people have opposite answers, which shows their true motivation (and party allegiance). > [@Damuri\_Ajashi](#): > > They won’t alter it by much if you raise the top marginal rate from 35 to 39.6. After all Clinton raised it from 31% to 39.6% and he presided over some reasonably good economic growth. > > a 4.6% difference in the top marginal tax rate wouldn’t make much of a difference. But you don’t know that. You just think that because it lines up with what you want to believe. The world was different in the 90s when Clinton was raising taxes. We’ve had two bubbles pop since then. > [@Damuri\_Ajashi](#): > > Even Libertarians generally don’t deny the stimulative effect of deficit spending, are you going one step further and saying that Keynes was full of shit? Nope, I love stimulus spending, but some times it fails, and some times it makes things worse. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [July 21, 2011, 10:17pm UTC](https://boards.straightdope.com/t/lets-tax-lottery-winnings-at-90/589175/140 "2011-07-21T22:17:41Z")
> [@Bosstone](#): > > Try to cut spending below current revenue. Just try. I dare you. I tried, and it’s not possible. California already went though this. [Previous page](https://boards.straightdope.com/t/lets-tax-lottery-winnings-at-90/589175.md?page=6) [Next page](https://boards.straightdope.com/t/lets-tax-lottery-winnings-at-90/589175.md?page=8)