If you hit the lottery just enjoy your piece of the jackpot pie
The appeal of mega lotteries is understandable.
By Tim Wilson
It has been six months since a $1.32 billion with a “B” Powerball lottery jackpot was won on a ticket sold in Oregon. In that time, two more jackpots have been hit but for a measly $214.9 million in May and $213.8 million in August.
As I write, the jackpot is now at an estimated $336 million. No doubt that with the holidays fast approaching, millions of Americans figure the best way to ensure their family’s gift wish lists are fulfilled is to plunk down $2 and strike it rich. Odds are only 292,201,337 other potential winning tickets stand in the way.
The appeal of mega lotteries is understandable. No stock investment or 401K savings plans have the return on investment of $2 spent at the local convenience store turning into millions.
What is confounding is the pissing and moaning you hear from lottery players about the prospect of paying taxes on a jackpot. You would think Uncle Sam was backing a truck up to their house and emptying it of every possession.
As a public service I want to point out a couple of things to remember about lotteries and lottery winnings for those unclear on the concept.
1. Other than the initial $2 spent on a Powerball ticket, you didn’t earn any of the money you won. And every nickel of taxes paid on your jackpot is coming from the millions of other people who paid their $2. That means none of those taxes are paid with money that is or was yours.
2. When you start with a $2 investment why complain about having “only” $96,937,209.60 deposited into your bank account? That is what remains if you take a $167,133,120 lump sum cash payment on the current $336 million jackpot. Uncle Sam gets $61,839,254.40 (37 percent) and where I live, the Commonwealth of Massachusetts would take a $8,356,656 cut (5 percent). Every one of the 96-million-plus dollars you get is still gravy.
3. The only person who suffers in this situation is a knucklehead who finds out he hit the Powerball for $336 million, thinks he is getting all of it, and runs out to immediately buy $336 million in cars, jewelry, clothes and a mansion. At least he is helping to drive the local economy.
4. Write this one down so you don’t forget it. Lotteries are nothing but a voluntary tax system. That’s right. Why do you think states created them? People will bitch about paying one more buck in taxes, but they’ll spend $50 a week on scratch tickets. Here’s the deal. You get a teeny, weeny shot at winning a jackpot and the state and feds get more money for the public coffers. And nobody made you participate.
If you are still irked at a big chunk of your not-earned-at-all lottery winnings being taken out in taxes, remember that the public sector is not alone in using this system. Do you think casinos give away every dollar that’s gambled in their establishments or that Draft Kings exists solely to reward sports fans for their good hunches on this weekend’s games?
If you do, P.T. Barnum would have loved you.
About the author
About the author: Tim Wilson is a lifelong resident of Massachusetts. He is passionate about his family, Marquette University, bicycling and all Boston sports.