Posted on | April 6, 2012 | Comments Off on The Mega Millions Jackpot Has States Dreaming About Taxes From Possible Winners
As the Mega Millions jackpot grows to a record $540 million, those buying tickets are not the only ones with dreams about what a win could mean. State governments facing hard times understand a local winner would bring a bonus tax to the home state.
The taxes on the lump-sum payment option to any single winner would bring several million dollars of revenue to the state. That revenue in could restore the entire cuts being faced by social services programs, pay for several hundred low-income housing units and help to increase the number of state police.
The sale of ticket has grown to the point that the current jackpot is the highest in the history of the lottery in the US. A lump sum payment for a winner would bring that person almost $400 million if they are the only winner.
States like Rhode Island, with a 5.99 % tax rate would gain over $23 million with the win. Currently the state has a $7.9 million budget and is $22 million short.
Each state sets its own tax rate for the winnings on the lottery. In New York, citizens pay 8.82 percent, but in California and several other states there are no state taxes.
Ohio would also collect $23 million in taxes, a fraction of the $56 billion 2 year budget, while Montana would collect $50 million for an in-state win. The winnings could help with state buildings as well as infrastructure.
In February and March of this year, Rhode Island saw two Powerball wins, one of $336.4 million and the second of $ 60 million. These two wins have brought $17 million that may replace a $20 million bond.
While states cannot depend on lottery winnings, any state where the tickets are sold would be happy to collect the windfall.
- Some States Are Also Dreaming Of A Mega Millions Jackpot (2010taxes.org)
- Why Are States Not Increasing The Cigarette Tax? (2012taxes.org)