I was thinking about the lottery yesterday (State lotteries in particular) and came to the realization that they are even more deceitful than you'd think. Lotteries are usually sold as being good for state education as in Connecticut all of the proceeds from lotto ticket sales go to education funding. But this ignores the portion of the "winnings" that is paid back to the state in taxes. This money is treated as income so it the taxes goes back into the general fund of the State. So in essence the state is funding its regular budget with help from the lottery. The other piece of false advertising is that although you can "win" say $10 Million, after taxes you only get about $5 million. So you are winning the money from the same organization that is taking it back from you. Shouldn't the state lotteries have to advertise what the post tax winning are since you have don't actually receive the whole lotto jackpot from them? (They usually take the taxes out before sending you a check.) an illustration of this is a women in Greenwich who won a $8.8 million jackpot in November of 2007. She just claimed the jackpot this week and took the lump sum payment of $3.8 million after taxes. So by taking that one time payment, with taxes she actually received less than half of the advertised jackpot. This just seems not only unfair, but like fraud to me.
Writer's Note: I do not play the lottery. I discourage others from doing so for many reasons.
A few disjointed thoughts...
YanıtlaSil1. I know in Spain, they don't tax the winnings of the state lottery. In the words of a former student of mine, "the winner wouldn't pay anyway."
2. The state probably can't really tell you how much you'd have after taxes because they don't know all of your deductions, filing status, etc. Now, your deductions, etc. are probably meaningless in the grand scheme of things if you win the lottery, but they don't want to be on the hook for it. Growing up, I had heard that if you win a big contest like the lottery, about half of it goes to taxes.
3. If we don't tax lottery winnings, then we probably have to not tax other prize winnings and gambling winnings.
4. Lottery money helping education is the biggest part of the scam. I remember once seeing the breakdown of where the dollar you spent on the ticket went. I believe it was only 1 penny for every dollar (it may have been as high as 4 pennies for every dollar) actually went to education. And who knows how many of those pennies actually got somewhere useful in education. If the state lotto was actually for the benefit of education, I'd consider playing it sometimes. As it is, it's just a get-rich-quick scheme for people bad at math.