Kinda has a stench of "the wealthy get taxed too much 😢"
The IRS doesn't get that money. The IRS processes that money and prevents your lottery-ticket-buying-ass from hoarding it all, and redistributes some of that unnecessary wealth to the utilities and services were all invested in together as a society.
If only actual billionaires got taxed that much...
This is what happens if you take it out as a lump sum. If you choose to take your winnings over an extended period of time (20 years or something), it is taxes more like income.
That said, I totally agree with you!
A significant amount is "lost" when you get immediate payout versus the annuity. The lottery will invest and be able to pay out more over the thirty years, thus they offer less the the lump sum
On 1.2 billion over 30 years, the average tax rate will not be significantly different year to year vs the avg tax rate on a lump sum.
The poor smuck probably claimed the lottery as an individual. He should have opened a company and claimed the ticket so that he can expense out a lot of his taxable income
/s
I am 99% sure this is not how it will work in this specific scenario but does otherwise when it’s business as usual.
Sadly, the IRS isn't properly staffed or equip to go after rich people...
Yeah good thing they take it from lottery winners up front.
I heard this eloquent way of saying it the other day:
The IRS doesn't have the money to go after people with money.
Like schools
Congratulations to the lottery company who was allowed to advertise a $400m prize as $1.28b.
Yep, that's the real issue!
Over here it's not taxed so prizes are smaller but they represent reality!
So tax the tickets and not the prizes? I could get behind that.
You'd get significantly more if you didn't take it in a lump sum
So we do all realize that advertised jackpots are annuitized amounts and that the vast majority take the net present value lump sum, which is usually about half the advertised amount, right?
Winner probably got about six hundred million, of which roughly forty percent was taken for taxes give or take state income tax rates.
Not being from the US I didn’t know that. That takes something from being completely unreasonable to be understandable.
I can’t believe some fake rich guy on the internet lied to us!
Still, if they’re not idiots the winner doesn’t have to work again so they’re still good.
That takes something from being completely unreasonable to be understandable.
Why would taxing a gross income of above a billion US$ by ~66% be "completely unreasonable"? Imo taxes for such incomes should generally be higher if anything.
You can take a lump sum payout or get it paid to you over 20 years. The lump sum is usually around 60% as the other poster said.
Damn, only half a billion dollars you didn't have before. Might as well not even bother.
True, it's too much for any individual either way
Is it even worth collecting the prize at this point?? /s
in Australia the winnings are tax free, and I believe the lotteries are meant to fund hospitals more directly. Kinda seems wild to me to do it the other way
The third sentence of the article says "The 1.28 billion is only if you take it over time, but if you want it all now, you get $747.2 million."
Which means the winner kept 58% of the actual gross. Which, considering state and local taxes, a 44% tax rate for that kind of windfall isn't horrible.
Assuming the winner has 40 more years of life, that's ten million a year to spend, if it's all kept under a mattress.
