Planning on trying to figure out what you’re going to do with $1.3 billion tomorrow after your “magic number” comes in for Powerball? Hint: the big winner is already decided and it’s not you.
Here’s what Cullen Roche had to say when the jackpot was only $900 million.
… the real winner of the lottery system is not the person who buys the winning ticket. The real winner is the government, which taxes the winner. The government automatically withholds 25%, but the winner will be bumped into the highest marginal tax bracket in the case of the lump sum. In addition, the player will very likely pay a state tax (usually 4% to 9%) and perhaps even local taxes. While the Powerball will be marketed as a $900 million prize, the actual payout to a winner in, say, Washington D.C., will be only $289.6 million — a full 68% less than advertised.
Tax the rich!! Since someone who isn’t rich usually wins the Powerball it’ll be interesting to see if they still want the “rich” taxed.
I have to admit that $290 million wouldn’t be a bad day’s loafing and I certainly wouldn’t turn it down, although I’m not buying a ticket. I understand the law of large numbers. The thing that really irritates me about the lottery is the smaller payouts. You know, like $1 million.
People win a million and they think they’re rich. Then they find out that they end up with a couple of hundred thousand in a lump sum pay out or $50,000 a year for 20 years. While I wouldn’t turn that down either, it’s not “rich.” It’s not even well off. And most people who win that kind of prize have it spent in less time than it takes me to walk to work (about 20 minutes.)
But you can bet the governments (because they all get a piece) are grinning from ear to ear.
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