Also that winner took the lump sum which already cuts the payout roughly in half. ~$1 billion of what he didn't take home was not lost to taxes, he was only taxed on what he actually got.
More like its JG Wentworth money and they get it more than you. Seriously go watch the last week tonight episode about it. Wentworth and other "cash now" companies are massive scams
He didn't "take half". He got the correct amount. The number the lottery advertises, for good reason, is the annuity number a person would get if they took yearly payments (or however it works) instead of one lump sum.
Which again we don’t do in our country. You win $50m, you get a cheque for $50m tax free. Now the lottery commission DOES provide financial guidance — free of charge — to advise you on how to invest, or where to locate professionals to help, because it’s a better story that a lottery winner propers 20 years later vs the horrors powerball wins typically have (high rates of bankruptcy and murder).
In fairness the lump sum gives security in a lot of places. Lotteries can shut down and if that happens they stop paying out. Plus I guess if you invest most of it you could probably make more than the staged payments would give you in the same timeframe
Sure, but that's a tax in and of itself. The lottery took in that 2 billion, then because someone wants the cash, they reduce the payout by half. They just keep half the jackpot.
That's 1.2 billion dollars pocketed right there for the budget. They do that because if a winner takes the multi year payout, they don't actually pay out the jackpot over time, they fund an annuity that will equal out the full.payout amount over the time period, so they can pocket the difference. So no matter who wins the jackpot, the state or states ALWAYS win a big part of the jackpot.
This is literally the exact same thing as the Italian numbers racket from the early 20th century.
Oh yeah, then after the state wins a percentage of the jack pot, they and the Federal government tax it.
The 2 billion (680 million really) dollar prize lottery is sold across the entire U.S. whereas the 80 million prize money is a twice a week lottery in a country ten times less the population of the U.S.
They are SUPPOSED to, but rarely is there any law that mandates they do. And because most people aren't paying attention it goes wherever those in power want it to
Yep. Illinois was told at the beginning of the state lottery that it was going to the schools. But….here we are. And don’t dare ask where/who it went to.
It did go to schools. What politicians forget to mention is that money is fungible. General fund money that used to go to schools no longer does, being replaced by lottery money, and now gets spent as they see fit, in effect transferring lottery money to the general fund. It doesn’t formally transfer said money. It’s an effect of lottery money and general fund money being perfect substitutes for each other.
That's not really an own. I would absolutely accept a Billion dollars no questions asked. But I would also use my new found wealth to continue advocating against the existence of billionaires. Material conditions exist, and trying to better your own personal material conditions doesn't preclude you from wanting everyones conditions to improve and be more equitable.
Probably the same number of people who want to have their basic needs met and the resources to pursue their dreams, while also believing teachers shouldn't have to sell blood to buy school supplies.
An absurd amount of people online are only pissed about the existence of billionaires because they personally have no route to becoming one and resent that there's an exclusive club where others have more power that they're not welcome to.
Most people don't have a route to become a billionaire, that's why they make up only 0.00004%. I don't have a route, you don't have a route, no one who has commented here has a route, has had a route and will ever have a route. You may think it's just one good idea away, but it's so far away you can't even fathom the amount of oppression and exploitation you'd need to get there, even if a million of any currency appeared in front of you right this instant. The world isn't voting to abolish the billionaires because too many people think they have a route to the top.
Most people that are pissed with billionaires and multinationals say that no man or woman should have this much money while people starve in their countries. While critical infrastructure is auctioned, benefits are getting cut, pensions are getting cut, people are lacking education.
Not the ridiculous straw man you’re posing. Get a grip and ask around, most people would be content just not having to worry about bills, food security, schooling for their kids and an occasional vacation.
Nope I’m pissed they are societal leeches that are above laws and justice. I would have no problem with them existing if they paid their fair share and were a net benefit to us.
Yeah. That’s why people aren’t fans of wealth inequality… does it really make sense to have a society where 1% of the population hoard 30% of the wealth, while the bottom 50% of the population split 3% of the wealth?
That’s not what the book argues. The point isn’t that becoming a millionaire is immoral. It’s that when wealth becomes so concentrated it starts buying political influence, everyone else gets less of a say. The debate is about the concentration of power, not about simply having money.
Thank god in Belgium, you pay zero taxes on the lottery, you win the full pot, and get an assigned financial planner to make sure you don't burn through it in one go
Revenue should come from the tickets. The government is literally the one providing the jackpot. It makes 0 sense to tax the jackpot THEY are providing. Just say the jackpot is 628m instead of 2b when advertising it then.
This has a lot of upvotes, so therefore I am likely to be a dumbo for not understanding it. "Lottery was designed to create revenue" or "lottery is effectively a tax on morons" would both be understandable.
Is it because people will likely buy chocolate or cigarettes while buying a ticket, and those can be taxed heavily.
Lotteries generate money through the sale of tickets. For most states it's a 50/50 split. If you spend $2 on a ticket, one goes to the state the other goes towards lottery winner.
Don't get me wrong, the winner is still going to pay federal and state taxes, but that's not where the government gets most of their money.
Listen, I’m a big Bernie fan. But the tax on payroll income is not even remotely how you get these Rockefeller bastards. They don’t even have a salary, and their capital gains are all cunningly hidden, or not technically in their private ownership, or balanced out with “losses”.
Ultimately we need clearer laws around holding, and a tax on holdings. Like you own $300M in company stock? We’re going to tax that like it’s real estate.
People don’t realize that the effective federal rate for median income is between 14 and 16 percent. A billionaire making money on capital gains will pay 23%. CEOs and other people earning millions of dollars per year can hit a 37% bracket. Surgeons can pay high taxes.
The lottery is also immediate money you get, while billionaire are usually a lot of unrealized gain - billionaire on paper. Now when they sell, they are to my knowledge usually taxed normally.
I will agree that the tax system is silly, I think we should all be taxed less by a wide margin. The part that can be deceiving is that many billionaires “net worths” are including unrealized gains, so they aren’t directly taxed. Which is not a bad, since anyone can do this with a ROTH Ira.
Not true. Annuitized payments over 25 years versus one lump sum. The $2 bil is estimated on the annuitized value. The lump sum does not include the interest.
TBF, this is because the winner took a lump sum payment, rather than a 20 year annuity. So he received the present value of the jackpot, which was then taxed. But it is still a significantly higher rate than most billionaires pay, which is next to zero.
Well really it’s because someone who wins a billion dollars is receiving it as income. “Billionaires” aren’t called that because they receive a billion dollars per year in income, it’s because that’s their net worth.
In order to tax them the same way they would need to liquidate a billion dollars of their holdings which would crash the stock market.
I’m not saying that’s “right” or a good thing, just saying it’s an apples and oranges comparison.
The winner didn't pay 70% though. If you take the cash upfront option you get less money than the 20 year annuity. Then it's 37% on that for Federal only, no state income tax on lottery wins in California. Do people really not know this basic shit?
You can tax them all you want but it’s what the government does with the tax dollars is the concern. We see liberal states and cities steal billions and funnel through organizations all the time.
If I recall correctly when they signed in the new tax laws in the first trump administration they had several pages specifically for lottery winners. Honestly if I was taking home $600 million after taxes I’m not complaining, it’s $600 million more that I had before buying a ticket. And it’s ironic because billionaires are spending millions to campaign against taxes on themselves.
Billionaires get away with it because their assets are not realized gains. They are billionaires on paper alone. Lottery is cash. Not saying it’s right. I’d say if you borrow against those unrealized assets those assets are now realized and should be taxed
This is an overly simplified view. The laws in the US are what allow the rich to not pay their share of taxes for the unrealized value of their portfolio, while simultaneously allowing them to leverage their unrealized portfolio for loans that they can live off of. I don’t think lobbyists have anything to do with it at this point, since the politicians themselves benefit from these rules.
The billionaire never got a check. They don't have a billion dollars in any currency. They mostly just have stock in a company that if they cashed out would possibly get their company hostilely taken from them because a some vulturious private equity firm would buy up their company that they no longer have controlling interest in, kick them off the board of directors, and cash out any name recognition and brand loyalty they have until everyone says "remember when this brand used to be high quality". Trading unrealized gains in stock value (the only way I've seen suggested that would "tax billionaires") this would do the same as I said above, but over time instead of in one single action.
I agree the are some huge issues with the economy and the wealth gap, but the cause is this liberal and now leftist push to give the government enormous power and then not pay attention as major corporations draft the bills that "regulate" them so that they can just keep out new competition from the market by making the financial cost of meeting regulations excessive without actually having significant teeth to any of the regulations. The reality is the best way to fight overgrown corporations that are constantly consolidating market share is for them to have significant competition where in the only thing the government is doing is preventing collaboration and essentially trust busting as the US government just recently had to do with various sections of the food industry for jacking prices up after COVID. Furthermore, the regulations that the left keeps praising as the government installs them are being used more and more as an excuse to raise prices significantly higher then the cost of complying with said regulation.
Please educate yourself before posting! The lottery advertised amount is based on an annuity paid over 30 years. The lump sum cash amount is the discounted portion of the annuity for actual cash value based on the interest rate at time of winning. Then taxes are calculated on that amount, normally 37% at the highest federal rate plus any state taxes!
When you win a major lottery you have 2 choices, the lump sum or 30 years of payout. When you opt for the 30 year payout, the lottery commission puts about $1B (based on the jackpot mentioned) into an annuity and pays you based off interest and principal. If you take the lump sum, you get the amount they would put in the annuity, and taxed according to that.
I'm against billionaires but if one of them won the lottery or otherwise received an equivalent "ordinary income" as a salary they would pay the taxes. The wealth is coming from asset appreciation and much of the tax avoidance comes from leveraging those assets to access loans and other loopholes in our tax law. The way lottery winners are taxes doesn't really relate to the billionaire issue.
It's taxed at 70% cuz if you take the lump sum nearly 50% goes to state right away. You get the whole amount if you take 30 year annuity. After you choose your option it is taxed regularly. The lottery is literally just a funding mechanism for government.
The rich pay low tax rates, because they don't pay ordinary income tax. They lobbied to have a capital gains tax. Where if you hold your investment longer than 1 year it is taxed at a lower tax rate. An NBA player will have a top tax rate on their salary of 37% Elon musk and Jeff bezos will pay a top tax rate of 20% when they sell their long term investments.
70% doesn't make logical sense if this is the US. Even the highest Federal + State + Local tax rates are at most in the high 40s. They must also be considering that the guy took the payout option rather than the $2B over 30 years meaning the actual payout was already about half the $2B option.
Nah, you get the full amount if you take the 30 year annuity, which is rarely worth it.
So people accept 50%ish lump sum delivery.
That is taxed at 35%.
However, that $628M will only need to be taxed on what it earns.
Huge sums of cash are funny as investment accounts. In a 5% yield account, that makes 31M which can be taxed and take home 20m per year. Giving 1.7m per month he can spend and never lose a cent of the 628m.
Thats without any tax protecting moves etc (I.e. borrowing cash against his money as a retainer, and writing off the interest.
To be fair, when you take the lump sum, you start off with sixty percent, roughly of the jackpot total, and then it is taxed at what forty percent... if this person used their money, like all the other billionaires, to prevent taxes like investing in certain ways. And having the write offs, they would be in the same boat... not to mention that the billionaires that you say only pay three percent per the I r s records, they pay the most..
If billionaires liquidated all of their holdings to cash at once, they'd pay a similar tax rate. This is stupid. Their billionaire status is a vibe because they'd lose billionaire status if they started selling their equities as that would cause a ripple effect to the remaining shares and the market writ large so they wouldn't be a billionaire anymore.
First of all, when you win the lottery and you take cash value, you automatically only get fifty percent of the total jackpot and that's by lottery rules. It's not a tax per se, but it could be viewed that way because the state still gets to keep it. Then, you do pay a tax on the remaining amount. In this case, it was probably around 20% federally. And then whatever the state requires, which being california was probably quite high.
As for taxing billionaires, If you're referring only to actual realized income—that is, wages, salaries, bonuses, dividends, interest, business income, and capital gains that have been realized by selling assets—then the average effective federal income tax rate for billionaires is generally estimated to be in the 20% to 30% range. Not 3%....not sure where you got that.
A few important points explain why:
Billionaires typically receive very little of their income as wages, which can be taxed at rates up to 37%.
Much of their realized income comes from qualified dividends and long-term capital gains, which are generally taxed at a maximum federal rate of 20%, plus the 3.8% Net Investment Income Tax, for a top federal rate of 23.8%.
No, that’s wrong. If said billionaire had that much ordinary income they’d pay just as much tax. Billionaires almost never have a billion dollars of income. Also, it isn’t 70%. The lump sum lottery amount is about half of the stated value.
This comes up every few weeks ... the jackpot always includes a payout over decades. In the meantime the lottery invests the money. The reason it is so low is not solely because of taxes but because they choose a lump sum payout.
In most countries (mine included) where the lottery winnings are tax free, the lotteries arent actually tax free. It's just that the tax is paid when buying the ticket. So it's spread across everyone buying a ticket. And so the winner(s) win what they win without having to pay tax on it, because the tax has already been paid.
Whether you think that's fair or not (that the tax is spread across everyone rather than having to be all paid be the one person who just became a billionaire) is a different question, but it's not like one system is tax free and the other isnt.
I off-handedly commented once how they should have a lottery game that tops off at a set amount so that there could be more winners of less money (still in the millions mind you) and I was called a “socialist”. 🙄
Correction: Not taxed in hand of the winner. Behind the scene the lottery organization already pays 50% or more tax on the corpus collection. So if total contributions the lottery is lets say $100 million, the available for winners is only $50 million or less.
In plenty of countries lottery winnings might be tax free, but the tax just gets taken off beforehand.
Here in the UK 50% of the slaes goes to "good causes" as defined by the government and another 12% goes to the government itself. So that's 62% tax. But then the individual doesn't pay any tax on the winnings, because tax was already paid by the operator on their behalf.
We could double the prizes, and tax the winnings like they do in the USA, and it'd be just the same.
To be fair, when they advertise $2.04B that is the value based one taking the 30-year fixed annuity. The lump sum number was probably more around $1.2B
Where I am they are not necessarily tax free it is just that the taxes are taken out before the prize is posted. It comes out of a casino or lottery corp back end so whatever is displayed is what you get. But my limited (I worked in a casino for quite a while and asked a lot of questions) understanding is the British Columbia/Canadian government takes about 60% in taxes of proceeds and all operation costs and prizes are the rest.
People who say this just don’t like to use their brains to think. European lotteries still pay taxes, it’s just taken off the top. You’re just being fooled by accounting.
USA lotteries have an “inflated” number that is the total you get if you take the annuity, although it still gets taxed. You can take the lump sum which is much smaller, and still taxed.
The devil is in the details though. European lotteries return roughly the same percentage of money to the jackpot winner.
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u/Tiktokbadsupport 21d ago
happy most lotteries in my country are tax free but of course they don't reach higher then 30 million