Usually, people want to avoid unnecessary taxes–except for one. That one they line up to pay, even though it’s a voluntary tax. Stranger yet, people think paying this tax makes them money. What strange, upside down world am I talking about?
The Lottery
Do you think of it as a tax? You should–that’s how states use it. 11 states made more money on lottery sales than from corporate income taxes.
- Only 62% of lottery revenues are paid as winnings – overall that’s a 38% tax, a higher tax rate than households making half a million dollars.
- The rare winners of $600 or more pay up to 45% on the winnings after state and federal taxes.
- How does this affect the poor? Since most gambling money is drained from the poor a family making $30,000 a year would lose 10% of its income by regular gambling. The state income tax averages only 5%.
If you love people–hate Powerball.
