Recently, we had something of a record lottery... $640 million or so.
While three different tickets won, for purposes of this exercise, I'll use a single winner for all of it as the example.
Congrats! You just won $640 million dollars!
The people of this country, as generous as we are, spent an estimated $1.5 BILLION to win that amount. The various taxing agencies made $860 million or so at the jump.
For the winner, if you take the lump sum (And I believe it would be insane NOT to take the lump sum), that $640 million was reduced to about $347 million after the fed and the states feel compelled to take another $293 million in taxes and you figure in the "lump sum v. annuity" penalty.
With me so far? That's $1.153 billion in taxes this ticket has already generated.
So, of the money this ticket has generated, 77% or so of that $1.5 billion figure has already gone into taxes... not including state income taxes, if your state has any.
So, let's assume the fine folks in Olympia (and, apparently, in this state, if you get $100M plus, you've got to pick it up in Oly) hand you a check, you're walking out the door, and you drop dead.
Hey. It happens.
Guess what? State and Federal ESTATE taxes kick in, and you lose AT LEAST ANOTHER $173.5 MILLION! That's right... State and federal taxes will have taken $1.326 billion out of the total taken in for this ticket... or, taxes up to 88%+.
So, this ticket... this one piece of paper that has already generated state and federal taxes will not confiscate ANOTHER $173.5 million of money the state and federal governments have ALREADY TAXED, leaving you (actually, you heirs) with, out of the $1.5 billion spent on this ticket and the $640 million you "won," $173.5 million.
And as long as that figure stays over what, 4 or 5 million? Any time anyone with that kind of cash dies, the government gets around half!
Not that I'm going to win this kind of cash, you understand, or much of any kind of cash, really, but I prefer the English system where, as I understand it, lottery winnings are tax free, because the PURCHASE of each ticket is taxed... so government makes their money up front.
The idea that our government can tax the same dollar repeatedly is absurd on it's face. Is it any wonder so many people work so hard to move their money off shore?
Imagine how much better off we'd be if the government tax system approached equality and fairness... and, by the way?
Taxing the rich, who do not use most taxpayer services, more then we tax the poor, who use them the most... or not taxing the poor ANYTHING, which gives them no skin in the game and just strengthens the entitlement aspect of our society... is NOT fair, no matter how much the poor want the government to GIVE them more of OUR money. (And no, I am not, and am not likely to become, "rich" or have an estate that the taxers will notice when I leave this mortal coil, so to speak.)
Just sayin.