The lottery scam: regressive taxation of the poor and fraudulent marketing.

[originalpckelly]

This week's Powerball Jackpot is being advertised on very large billboards across the nation as "$142,000,000". Many people are probably aware that is not it's real cash value at this time. Right now that pot is really $68,300,000.

The Multi-State Lottery Association is inflating the value of the lottery by basically doubling it's actual value through the use of an annuity. That we are aware of. It's even advertised in much smaller and less impressive terms on all the Powerball signs.

However, there is a very large chunk of change that will be extracted from that, something that is not advertised on the board. That's the after-tax value of the lottery.

In CO the collective federal and state taxes on the lottery are 29% of it's value.

The actual after tax cash jackpot is $48,493,000 or only 1/3 of the large advertised amount.

That's a big difference and that after tax value of the lottery should be advertised in the big print instead of the highly misleading 3x inflated value.

In addition, if the annuitized value is to be advertised, it should be the annuity paid out per year.

Finally, the odds of winning should be advertised in the same large print as the jackpot. People need to know how nearly impossible this is.

It would show this regressively taxing scam for what it is. The vast majority of people who play the lottery lose, they have to or the idea wouldn't work.

It uses the poverty-amplified greed of our people against them to steal more of their money. I also have to wonder what it does for the gini coefficient, it's probably safe to say that all these people becoming millionaires doesn't help it much.

Instead of taxing the people who are already rich and in particular those who are rich but did not earn it through anything more than kinship, we are diverting that tax burden to the hard earned dollars of millions of Americans.

Yes, the person who wins obviously didn't work for all that money, but the people who bought their tickets did, and the chances are that the person who wins will be a good hardworking person (there are a hell of a lot more of those than the fuckers at the top.)

[Redstone]

1. Well, why do you think it's called GAMBLING? Anybody who's too dumb to understand

that, well, they deserve to lose their money.

Redstone

[w4rma]

38. A tax on the mathmatically uneducated. (nt)

[ComerPerro]

2. I would hardly call it a regressive tax. You bring up some good points

about how most who play the lottery are usually in the bottom 60% of income earners, lower and middle class. And yes it is true that while taxes on lottery winnings make great revenue, revenue for programs such as education could be generated just as effectively by implementing a fair and progressive, bracketed tax system.

However, I think most people will take contention when you assert that this is a regressive tax. While this tax does hit those on the lower end of the income scale harder (tax earned from the jackpot, divided over the cost of a lottery ticket) is very minimal. According to your figures, if 29% of the winnings are taxed, it could be said that the tax rate is 29% of the cost of each ticket. Not high, especially when you figure $1-5 per ticket. When you compare it to their income, its possibly $3-5 of anywhere from $100-300 weekly, or 1-3 percent.

That is not to say that I don't have issues with the lottery. I find the campaign to be patronizing and predatory, much like casinos. Then again, I think we do a dis-service to the working class to think that they are so naive that they may not have a grasp of the chances of and against winning it big.

There is a very real differnece between lotterys and casino gambling (motivated by greed) and predatory lending practices used by payday loan corporations and credit card companies. People don't pay the lottery or go to the casino to try and make rent.

[originalpckelly]

7. There are a number of people in this country who spend lots and lots of money on those tickets...

I'm sorry, I also forgot to say that's an even higher amount of money that doesn't go into the jackpot.

In fact on 30 cents of every dollar actually goes into the jackpot.

[ComerPerro]

8. but its nothing like a regressive tax. I pay no percentage of my income to the lottery

and I don't make jack.

But you know what I do pay? I pay a ton of taxes, especially to social security, and I will never see a dime of it. I am not advocating ending or privatizing SS in any way, but I would like to mention that I have no choice in whether I pay or not.

I've never had lottery tickets automatically deducted from my paycheck.

[originalpckelly]

10. True, and Social Security is a scam as well. The surplus has been raided...

frequently to pay for the rich's tax cuts.

[ChenZhen]

32. Its a VOLUNTARY regressive tax...

Look, its a system of extracting capital from citizens and redistributing it into state funds, so it absolutely is a tax. BUT, being that it isn't automatically taken out of your paycheck, as you point out, it is, more or less so, voluntary.

You must realize, its "voluntary" nature is also compromised in that the lower classes are convinced in its efficieny in rewarding wealth and contributing to a better society (half of such convincing is a result of the failed education system provided by the state itself that the makes the lower class victims of such a tax). To consider that the lower class are paying a larger percentage of their income into this tax than the upper class, then it is most definately "regressive". Further, if 33% of the "jackpot" is rewarded to the "winner", it makes this state tax 66% as efficient as it possibly could be. We always hear of what lottery funds do (schools, roads, community projects, etc.), but they do nothing more than a normal tax could do, and do far less in that 33% of the tax dollars are extracted and directed towards contributing to an uneven distribution of wealth in America (and we should know how the gap between the rich and the poor is affecting America).

Face it...the lottery is merely a state sponsored voluntary tax programs that preys and depends upon the lower classes to contribute to this less than efficient system of collecting funds. EVERYTHING that lottery funds have ever done could have been done by taxing the excessively rich appropriately, and this would not have further contributed to the uneven distribution of wealth and the draining of the lower classes.

I don't care how you label this. The lottery is not a game and it isn't gambling. It is setup as a tax, as it functions, and is marketed otherwise to tip the scales in the favor of the rich. Period.

[INdemo]

3. I question the way winning numbers are drawn electronically not

necessarily the powerball but daily games winning numbers are drawn electronically..Now of course there are security measures taken at the daily drawings but if they can electronically steal votes than drawing winning numbers in a lottery should be elementary..Its been noted that many states lose money on daily games so if they can fix the drawing in the states favor well thats profit correct? I just dont trust 'em even with scratch off games they know where the large winning tickets are when distributed so this tells me that lotteries are just not on the up and up......

[Karenina]

4. Remember the one in NY shortly after the

WTC demolition that came up 911? :rofl:

[sandnsea]

5. Oooh, I need to go buy a ticket

I don't usually play, but I always do when the jackpot is so big. I don't really know why, even a little jackpot would be awesome to win. :)

Yeah, people know they aren't likely to win. For most folks it's harmless fun. For ROI, since there really aren't any guarantees in life, it's worth it to play $7 a month. It's as good entertainment as a movie, and you might end up a millionaire who would use that money to do some good for others to boot.

[demrabble]

6. No One Forces Anyone To Buy a Ticket.

No one is forced to buy a ticket.

For some, it is a form of entertainment.

Besides, the money it raises goes for education.

[originalpckelly]

9. The problem however, is that states could simply raise taxes on the rich...

maybe the capital gains taxes for example. While no one forces anyone to purchase, the problem here is that the vast majority of players are not rich. It's not an honest system.

[demrabble]

11. No,The "Problem" Is That Folks Are Going To Play The Numbers

No, the "problem" is that folks are going to play the numbers -- whether doing so is legal or not.

We could have a system where ALL the profits from playing the numbers go into an underground economy.

Or we could have the system we have -- that does not make people criminals simply because they decide to spend some of their money playing the numbers. And a part of the money folks spend playing the numbers goes to provide for education.

[The Straight Story]

12. That's because most people are not rich, smoking taxes do the same thing

affect the poor more than the wealthy.

Pretty much anything you offer on a state/multi-state level will affect the poor more than the rich.

Which is why we need to dump/reduce taxes on things like smoking and alcohol, etc, and raise taxes on the wealthier people.

[demrabble]

13. Keep Taxes HIGH On Tobacco and Alcohol

Smoking and drinking are two unhealthy and destructive behaviors that can an do rapidly become addictions that are terribly hard to break.

They both should be discouraged as much as possible.

One way to prevent smoking and alcoholism is to tax alcohol and tobacco.

Besides, those taxes raise money that support the medical care of the people who use those products.

[Solo_in_MD]

26. which makes the single largest tobacco addict the Government

When you use sin taxes to fund thing like school etc, when the usage decreases, the revenues drop and it has to be made up for elsewhere. That is one of the many flaws of using taxes as an instrument of social policy.

I hate smoking passionately, and have little sympathy for any smoker under the age of 60 or so. But taxing them for non-smoking related issues is bad public policy in the long run.

[originalpckelly]

14. Yes, they do indeed. So do gas taxes, because they are consumption oriented...

not wealth oriented.

[AshevilleGuy]

15. Most all consumption taxes are regressive, because the poor

usually have to spend ALL their income. The wealthy can save most of theirs, of course. If a national sales tax were to replace the income tax it would be a tremendous leap to a harshly regressive system, just as many RWers want.

But a lottery is simply not a tax, because no one HAS TO buy a ticket.

[originalpckelly]

17. So then I suppose the taxes on a pack of cigarettes is not a tax either?

[MonkeyFunk]

37. No it is a tax

but the state isn't selling cigarettes.

The state DOES sell lottery tickets, and people can choose to buy or not to buy them.

Basically, the state sells them as fund-raisers. If the state didn't, somebody else would. But that doesn't make it a tax.

The state forces itself into a private transaction between me and a cigarette manufacturer and takes a cut. I have no legal option to buy lottery tickets from another source.

[demrabble]

18. Consumption Taxes On Food and Clothing Are Regressive

Consumption taxes on necessities -- things like food and clothing -- are certainly regressive.

I'd have a real hard time saying that taxes on the consumption of things like alcohol and tobacco, however, are regressive.

No one needs to spend any of their paycheck on tobacco or alcohol. And the state should do what it can to discourage the consumption of dangerous, addictive substances.

[originalpckelly]

21. No, the state is the people and no one has any right to tell you what to do with your life...

unless it affects them somehow.

[demrabble]

22. If Enough People Decide That They Are Affected By The Bad Habits of Others...

If enough people decide that they are affected by the bad habits of others, then they can, through their elected representatives, make their wishes known.

If people die prematurely, or are addicted to dangerous substances, then we all suffer.

We lose the creativity of people who die early. It affects all of us when someone smokes or drinks and, as a result, dies early.

We all are affected when, as a result of drinking, people die and children are left without parents.

That is why we do have the right -- and the duty -- to make sure that our government do what it can to encourage people not to drink or smoke -- both habits that are unhealthy and addictive.

[The Straight Story]

25. That is what the right said about gays and aids too, an unhealthy lifestyle, etc

It is about control of the individual.

Our bodies, our choice. No one else's business whether it is for an abortion or to have a beer.

[hfojvt]

23. it is a government revenue scheme

that collects money from the lower income people. Same difference. Maybe not a tax, but a regressive source of revenue. And it is not just the powerball, it is all the scratch-off games.

[pampango]

39. Would a national sales tax that exempted food, clothing and

medicine be fair enough? I imagine that most poor spend their money in those areas. Or would exempting those areas make it impossible for the revenue to be sufficient?

[ChenZhen]

33. Yes, because we cant find a fairer way to raise money for education...

You can raise people in a society based on the "American Dream", teach them about chances to be rich, about how anyone can do it, litter them with propaganda about getting their break, bombard their brains with images of dollars, of winning it big, and brain wash them into the idea of a dollar-a-day will result in a million dollar ticket eventually....

"No one is forced to buy a ticket"

And thats what is so beautiful about it to them...they don't have to force anyone.

And thats also what is so comedic about it to them, as they are laughing at you.

[ScreamingMeemie]

16. I like to think that most people would realize how next to impossible

it would be to win the lottery.

[demrabble]

19. Most People Who Fly In Airplanes Also Recognize

Most people who fly in airplanes also recognize how remote the possibility is that they will die in an airplane crash.

But they still buckle their seatbelts.

The fact is that SOMEONE ALWAYS does win the lottery.

So, even though the possibility is remote, it is still possible.

And some people will always hope for the possible -- even if it is a very remote possibility.

[ScreamingMeemie]

20. Totally agreed. But turbulence can be nasty.

;) My point was that I really don't think there are that many people that are scammed by the odds. :hi:

[dysfunctional press]

24. I wouldn't call it a regressive tax so much as a "stupid" tax...

and it's a completely voluntary tax at that.

but- you can't win if you don't play.

the way i see it- someone's gonna win- and i don't mind spending a buck or three(at most) on a chance that's just as good as anyone else's.

if somebody else is stupid enough to "bet" the rent on lottery tickets- that's his stupid problem.

[Big Pappa]

31. I

buy2 tickets a week. Sure I will probably never win, but hey it's fun and a least some of the bucks go to education. BTW I love it when someone wins a big jackpot and says they are going to keep working their 9-5 job. Sure!

[pampango]

40. At least in Ohio, the lottery money does go to education, but...

the state legislature has simply reduced funding for education from other areas to cancel out the increased education funding from the lottery.

[dysfunctional press]

41. same thing happened in illinois...

they got the lottery in by saying that the money would be used to fund education in the state- but what they didn't say is that education would still only be funded to the amount it was budgeted for- the lottery money wouldn't be anything above and beyond the amount allocated in the budget. so- the lottery didn't mean more money for schools- it meant that more state money that otherwise would have gone toward education was available for other projects.

[Thothmes]

44. Education

Did the same thing in Virginia. Lottery profits to the General Education Fund replaced appropriations. The system did not increase the money available for education by one red cent.

[B Calm]

27. Are you saying my new pension plan is a scam?

[Codeine]

28. You can't protect people from thier own stupidity.

People who blow a significant amount of cash on the lottery are demonstrably stupid; take away the lottery and they'll lose their money at the dog track or cockfights or Vegas. I'm not sure why being liberal is supposed to make me feel sorry for people who don't have the sense God gave a goose.

[johnaries]

29. We already know all that. But buying lottery tickets is FUN!

I know the chances for winning are next to impossible (although someone DOES win...), but having that ticket and being able to fantasize about winning is well worht the measely $1 I paid. Plus, the proceeds have been a great boon to our educational system here in TN.

So go away, party-pooper! If you think the Lottery is a scam, DON'T PLAY!

[riverdeep]

30. Years ago,

I heard someone say that if you gave everyone in the country the same amount of money, say, $100,000, in a couple years the people who were poor before would be poor after, and the rich would be rich after. Now, this has overtones of poor deserving to be poor and rich deserving to be rich I don't subscribe to, but I do believe that, one of the advantages the rich have the poor don't, is knowing how to handle money.

Now, I will stop and wait for the thrashing.

[Lydia Leftcoast]

42. That's one of those "conventional wisdom" sayings that right wingers

love to repeat as "proof" that poor people deserve to be poor, because they're stupid or lazy, and rich people deserve to be rich because they're smart and hardworking.

I've never seen any proof of the statement itself. No one has ever given a test group of people of different income levels $100,000 each and come back several years later to see whether the recipients have used their money wisely or not.

It's a pulled-out-of-the-ass statement that no one has ever proved.

[michaelwb]

43. Not quite the case..

"but I do believe that, one of the advantages the rich have the poor don't, is knowing how to handle money. "

No the advantage is having the money to pay someone to manage their money.

[MonkeyFunk]

34. If the return is greater than the odds

of winning, it's a good bet. Otherwise, it's a bad bet.

When lotteries get above (generally) 30 or 40 million, they become good bets.

[BlooInBloo]

35. Did you delilberately leave the word "voluntary" out?

Also, it would've been nice if you had used terminology that has specific meaning, such as "present value" and "future value". Of course, doing so would make it nigh-impossible for your bamboozlement argument to gain even a modicum of verisimilitude.

[MilesColtrane]

36. My favorite bumper sticker....

"The lottery is a tax on people who are bad at math."