Update to yesterday’s Powerball Lottery post.
Unfortunately (or fortunately as it’s still a heck of a prize!), our Powerball winner will split the jackpot with two other lucky winners.
Meaning the cash option is reduced to approximately $310 million.
Deduct Federal Taxes (39.6%): $122.7 million
Deduct CA Income Taxes for the CA winner (12.3%): $38.1 million (Perhaps even more lucky for the other winners reported from Florida, no state income tax, and Tennessee, income taxes on dividends and interest only!) Sorry California, you should have picked a different state to win in. 😉
Net winnings: $149.1 million on a jackpot that was supposed to be headlined at $1.6 BILLION. Representing about 21 minutes worth of spending by the federal government.
The federal government of course, gets to tax all three winners – collecting a total of approximately $368 million.
Once again, the government won the lottery…particularly when you consider that an estimated 1 billion tickets were sold – at a price of at least $2 each, which lines the coffers of state government-run lottery commissions.
No wonder many states have passed laws prohibiting gambling. They don’t want competition.
The largest lottery jackpot in US history headlines as a princely sum of $1.5 billion.
But if you’re the lucky winner – overcoming the astronomical odds of 1 in 292 million – and managing to not split the pot with other lucky individuals who also managed to overcome the same astronomical odds….you’ll never see that much thanks to your long lost friends in the Internal Revenue Service and state departments of revenue.
That’s right, not only will you have to fight off droves of never before seen “cousins,” long lost friends, acquaintances, that guy who held the door open for you that one time when you went to buy a lottery ticket…you’ll have to fight off scores of government bureaucrats looking to feast on your winnings in exchange for all the value the government provides to you for the roads they haven’t been building or maintaining.
First, the cash option drops “Billion” from the figure – presently standing at $930 million.
The federal government stands to collect 39.6% in federal income taxes: $368.2 Million
Next, most Americans will face a state tax bite – which varies by state (0% in some states all the way up to a top rate of 12.3% in California. Really California?! No wonder people are packing up and leaving you…), but we’ll estimate state taxes at 5% : $46.5 million
Some will also face city or local income taxes – but we’ll disregard those for now.
Your net winnings will be approximately $515 million.
Federal spending in 2015 was $3.687 trillion (about $421 million per hour).
Meaning the amount of money you’d expect to see from winning the largest lottery jackpot recorded in US history will net you…..73 minutes worth of federal spending.
May the odds be ever in your favor…
“Money” by Pictures of Money