Is it true that lottery in USA has too much tax?

[Anonymous]

Like I heard someone won 1.3 billlion several years ago and only received 400 million? Like he paid taxes IRS state taxes.

[TroyDT]

It was a bit misleading because the cash payout rather than as an annuity was more like $750M. But still, the federal government takes 37%. And the state where he lives is one of the few that also taxes the winnings. So still obscene,, just not quite as bad as they tried to make it.

[Anonymous]

It's taxed heavily but taking the lump costs a slab

Personally I'd take the lump because I can invest it better than the board likely can

[Soteris]

I mean, pretty sure that is the standard in most countries. The only difference I would think is advertising the winning price before or after taxes are included.

Taxes are usually calculated as an income and taxes can be very brutal at high income which is why so many rich people attempt to dodge taxes using all kinds of shady and usually illegal means. Problem is, high income might be fine for rich people thanks to using those loopholes but chances are you are not going to use any loopholes when accepting the lottery winnings which means you pay the full tax as intended.

The reason the 1.27 billion went down to 433 million is not really because of taxes though. You would only get the 1.27 billion of you accepted the payout over time, if you wanted the money right away you only got 747 million which in turn was taxed thrice because of poor planning by the winner resulting in the 433 million.

[Avicenna]

Well, that $1.3 billion would normally be paid out over 30 years, IIRC, but if you take it as a lump sum it's less, maybe $800 million, before taxes because the future value of $1.3 billion is less than the present value of $1.3 billion. Also, even someone taking the annual distributions will have to pay tax on them, so no one ever gets the full jackpot.

[exitseven]

Everyone thinks that the rich don't pay enough taxes and then complain when lottery winners are taxed up the wazoo.

[USLegionary]

Yeah it kind of defeats them boasting of a billion dollar jack pot.

[FunkyMonkee]

The sad this is, taxes are SUPPOSED to be VOLUNTARY!! There's NO law that says you HAVE to pay taxes!

[NaultD]

If you get it all at once it's more tax. Smart people take a monthly stipend.

[CloudMassacre]

It’s the amount of tax that anyone with that amount of money Should be taxed, but it only applies when poor people become rich

[Jouth]

here is an informative video on the matter

https://www.youtube.com/embed/u9oj-iQNXKQ

[CuriousMufuxka]

Oh, that poor soul :( Look any lottery is a bullshit scam to take away money from citizens. If people are still that stupid, than game on!

[joeldalton]

Everything in the USA has too much tax.

[OddBeMe]

well... it is state sponsored racketeering. So...

[Anonymous]

Not sure but I pay $120 out of every $800 I make.