Do a little research and you will find scholarly objections to lotteries funding education. Those tomes never focus their objections on the gambling aspect of lotteries. I, too, have no objection to gambling even though lotteries are surely sucker bets offered by crooked operators.
On the plus side lottery players abide by gambling’s golden rule: Never bet a lot to win a little. Having put the sucker bet in perspective, I want to point out some things lottery players should know before they plunk down their dough on fickle Ping-Pong balls with numbers on them.
First, the tax on lottery winnings is another example of the government punishing winners. A more ludicrous example was when New York City’s OTB charged a five percent surtax on the money won —— not counting the original bet. So if you were dumb enough to bet a deuce on a prohibitive favorite that won and created a minus pool, by law you had to be paid 10 cents on a $2 bet. The 10 cents was hit with the surcharge. Five percent of a dime comes to half of a penny. I was never sure how NYC collected it.
Seven states do not have a lottery:
There is no national lottery; however, the folks in those 7 states are smart enough to get a free ride because they derive some benefit from the taxes the federal government collects from lottery winners in the other 43 states.
Right from the start of modern-day lotteries state legislators shafted the people by asking for permission to change a state’s constitution and establish a lottery. Voters were never told the details. In short: Voters should have voted on the actual lottery law rather than just giving their state government permission to establish a lottery.
Incidentally, before lottery states reluctantly agreed to lump sum pay-outs, the state got the uncollected money from lottery winners who died before they had collected all twenty payments. The dead winner’s heirs got nothing. Somebody who knew a lot about lotteries told me about that gimmick a long time ago. I never saw it in writing, but I don’t doubt it.
In most cases a lottery’s big selling point was “Funding education.” After the voters said yes the parasites in government did whatever they pleased. That always meant screwing the public. Passing the Affordable Care Act employed the same method lottery hustlers used although the federal government did not ask voters for permission to change the US Constitution.
Remember this one?:
Everybody now knows what they got with Hillarycare II. Let’s look at what the public actually got from their state governments.
The first thing the public got was false advertising. The state advertises a jackpot knowing darn well a winner will only get approximately half of the advertised amount.
Let’s say that you are an average American and you win a jackpot advertised at 20 million dollars. The federal government will take approximately 10 million in taxes. In addition to the fact there is no way in hell the federal government can ever return 10 million dollars in services if you lived another thousand years ask yourself how many billionaires ever pay 10 million in taxes in one year —— if ever?
Pay ten dollars in taxes, or pay ten million dollars in taxes, and the average person will get the same treatment from the federal government —— “Thanks cluck. Now hit the road.” Should you buy any other product with that same guaranteed outcome your loved ones better lock you away in a dark room.
States that have a tax on income also take a bite. I know that New York City also takes a bite from residents who win a lottery.
NOTE: California has an income tax but does not tax lottery winnings as income. That is weird considering California is a state that taxes everything else to death.
The yearly amount taken by the federal government is substantial in those states with large populations, not to mention those big multi-state lotteries where jackpots often grow to hundreds of millions of dollars. The recent 640 million dollar jackpot will send approximately 320 million to the federal government without the federal government ever having spent a penny to get the money. The winners could live to be a million years old and there is no way they would get $320,000,000 worth of services in return for their money. And it is their money. They paid for the tickets and they won the jackpot.
Realistically, a minute number of people will win a lottery in each state; so lottery players should look at what they spend —— not what they hope to win. They should realize that fifty cents out of every dollar they spend on lottery tickets is going straight to the federal government.
Many voters who would never buy a lottery ticket voted for a state lottery because they thought they would benefit through education funding, etc. Had voters fully examined the tax ripoff before they voted, I doubt if enough votes could have been found to approve of a lottery in any state. How many voters living in a state with a lottery give a thought to how much money the federal government takes out of their state only to see the money disappear down the federal rat hole?
The hook that grabbed voters said that lottery revenues would help fund higher education. Yet, after sending half of the money earned from lottery sales to the federal government every state that earmarks lottery money for higher education claims a budget shortfall. So education ends up with taxpayers making up the never-ending shortfalls rather than simply keeping the lottery money that is sent to the federal government.
In case you are wondering about it, there is not a chance the federal government returns more tax dollars than it takes from any state. If funding higher education is the true goal of state lotteries the money that goes to the federal government should stay in the state.
NOTE: The federal government subsidizes higher education as a way to cultivate a collectivist mentality in young adults as well as offset the costs involved in educating illegal aliens. Institutions of higher learning refusing to cooperate with the Department of Education get squat. They all cooperate.
Tax exempt financial instruments are wondrous things; so it would be a simple matter for any state to structure its lottery so that winners get the full advertised amount. States do it with tax exempt bonds; so it should be an easy matter to set up something for lottery winners.
Also, some of America’s wealthiest “humanitarians” are allowed tax writeoffs when they give untold millions to foreign charities. Does anyone know if an average person can claim a deduction by contributing to their favorite charity with the money the federal government is grabbing?
Imagine winning a $300,000,000 jackpot and telling the federal government that you want the government’s $150,000,000 to go to your church in order to qualify for the deduction on your $150,000,000. Guess how far you would get with that effort?
I always hoped that a person with a winning ticket would give the winning ticket to a tax exempt charity. The charity could then demand all of the money when it claimed the prize. I wonder how that would play out?
Finally, I do not like to cite anything in Canada favorably. I’m afraid my positive comments would be taken as an endorsement for Canada’s socialized medicine. Nevertheless, I have to praise Canada’s lottery. Winners get the full amount tax free. Not only that, the interest the money earns in one year is also tax free. That encourages winners to put the money in the bank; calm down, and plan carefully, instead of going on a foolish spending spree the minute they get the dough.
I must add that that is the way I remember the Canadian lottery. It might have changed over the years. If I am remembering the Canadian lottery correctly how come the folks on the Left never mention Canada’s tax exempt lottery when they praise socialist Canada as a utopian paradise?
Here’s a nice article that offers another look at lotteries:
Lottery LessonsLotteries are an indication of the moral depravity of government. They are essentially a tax levied in proportion to a person's ignorance of probabilities. They are a scam perpetrated by the government. Lotteries make probability ignorance a crime and the ticket price is the fine.
By Ron Ross on 4.12.12 @ 6:07AM