Lottery winners just as likely to go bust

steveox

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In the new movie "Lottery Ticket," the rapper Bow Wow plays a sneaker salesman from a poor part of town who has to survive a three-day weekend after his neighbors find out he's holding the winning numbers.

But for financially troubled consumers, the size of the jackpot may not matter: Five years out, people who win $150,000 are just as likely to declare bankruptcy as those who win less than $10,000.

That's according to a new study by researchers at the University of Kentucky, the University of Pittsburgh and the Vanderbilt University Law School. The paper appears in a forthcoming issue of the Review of Economics and Statistics.

"I've always been interested in whether you could solve people's problems to some extent by giving them additional cash," says Mark Hoekstra, assistant economics professor at Pittsburgh, who co-authored the paper with Kentucky's Scott Hankins and Vanderbilt's Paige Marta Skiba. "And ane taxrescdotally you always hear these things about lottery winners -- someone wins a bunch of money and the story doesn't end very well. But we weren't aware of any real empirical evidence on whether this was true."

http://finance.yahoo.com/retirement/article/110553/jackpot-winners-just-as-likely-to-go-bust

Wanna know why they go broke? ITS TAXES!!!!! Now if i win Powerball im leaving America for good and become a Canadian. Canadas lotto winners pay no taxes its all tax free. So there the IRS cant touch me can under canadian law i cant be extradited.
 
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BigRob

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And theres not a Damn thing Uncle sam can do me when i buy property in Vancover

What you ignore is that if you win the American lottery, you are going to have federal and state taxes withheld before you get your prize money (in most states).
 

GenSeneca

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What you ignore is that if you win the American lottery, you are going to have federal and state taxes withheld before you get your prize money (in most states).
Federal government should tax away 60% of his winnings, State should take 10% and the local/city tax should get another 5%... Totaling a 75% tax.

After all it is you calling for these higher tax rates on "rich" people... So after Uncle Sam takes out the amount of taxes you say is "fair" for "rich" people to pay, you'll have 25% of whatever the jackpot was left over for your move to Canada.

For every one million in winnings, you will get $250,000 and your Uncle will get the other $750,000.

Oh yeah, almost forgot, even after paying such high taxes and getting so little of your winnings, some jackass is going to b*tch about how "greedy" you are and demand government force you to start paying your "fair share" in taxes.
 

GenSeneca

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also if the goverment gives out the prize, it could just say fine no taxes...and make the pots half the size...then you can feel better about no taxes ( but win same amount )
The jackasses I spoke of would really go ballistic if that happened. At least lottery winnings are not earned, it's much worse to actually earn $1,000,000 only to see more than half of your hard earned money shoveled into the blast furnace of government and redistributed to parasitic jackasses who insist you're still not paying your "fair" share.
 

SapphireJinx

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The jackasses I spoke of would really go ballistic if that happened. At least lottery winnings are not earned, it's much worse to actually earn $1,000,000 only to see more than half of your hard earned money shoveled into the blast furnace of government and redistributed to parasitic jackasses who insist you're still not paying your "fair" share.

Have you actually profited $1,000,000 on a business or investment, income property, etc. and paid more than half of it to the U.S. government in income tax? I mean profit, not gross (before payroll and payroll taxes, etc.). Really? Really, really? Not just I'm an anonymous poster on the internet so who's gonna know really?

Speaking at a $4,600-a-seat fundraiser in New York for Senator Hillary Clinton, Mr Buffett, who is worth an estimated $52 billion (£26 billion), said: “The 400 of us [here] pay a lower part of our income in taxes than our receptionists do, or our cleaning ladies, for that matter. If you’re in the luckiest 1 per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent.”

Mr Buffett said that he was taxed at 17.7 per cent on the $46 million he made last year, without trying to avoid paying higher taxes, while his secretary, who earned $60,000, was taxed at 30 per cent. Mr Buffett told his audience, which included John Mack, the chairman of Morgan Stanley, and Alan Patricof, the founder of the US branch of Apax Partners, that US government policy had accentuated a disparity of wealth that hurt the economy by stifling opportunity and motivation.

http://www.timesonline.co.uk/tol/money/tax/article1996735.ece
 

BigRob

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Have you actually profited $1,000,000 on a business or investment, income property, etc. and paid more than half of it to the U.S. government in income tax? I mean profit, not gross (before payroll and payroll taxes, etc.). Really? Really, really? Not just I'm an anonymous poster on the internet so who's gonna know really?

I have... my tax bill for the last time I did was 41% (so not quite 50%) of profit.
 

steveox

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Well I dont play for the Baltimore Orioles and get 7 million a year contract. I dont play for the Baltimore Ravens Orioles and get an 9 million year contract. And I dont play for the Los Angeles Lakers and get 17 million a year contract. I cant be a Movie star and make Millions. I cant be on the tonight show and tell jokes and make Millions. So, why not those people pay their fair share?
 

BigRob

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Well I dont play for the Baltimore Orioles and get 7 million a year contract. I dont play for the Baltimore Ravens Orioles and get an 9 million year contract. And I dont play for the Los Angeles Lakers and get 17 million a year contract. I cant be a Movie star and make Millions. I cant be on the tonight show and tell jokes and make Millions. So, why not those people pay their fair share?

That is right... you cannot do those things. Those things take talent, and as long as people are willing to pay money to see that talent on display, who are you to say they do not deserve to earn that money?
 

SapphireJinx

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I have... my tax bill for the last time I did was 41% (so not quite 50%) of profit.

Alright, I believe you. What do you have to say about the warren buffet quote? If you made $1M or more that only puts you in the upper middle class, at best. :p Still not where the wealth is concentrated in the world.
 

BigRob

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Alright, I believe you. What do you have to say about the warren buffet quote?

I have to say I want to fire my accountant. ;)

But no, I fully will admit that the tax code is written by a lot of rich people. Obviously those people are going to take care of themselves. I don't have a problem with that persay, since I have been able to use it my advantage on numerous occasions.

I also think, in terms of the Buffet quote, it is important to ask some more questions. Does his secretary file jointly with a spouse? If so, how much does the spouse make? That will change the tax brackets. Also, I would be interested (although probably won't) to see the breakdown of Buffet's profit on that year. What it unrealized profit in the stock market? Was it profit through his company, but his personal income rate was low? You get the idea.

If you made $1M or more that only puts you in the upper middle class. :p Still not where the wealth is concentrated in the world.

Depends on where you live.
 
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GenSeneca

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Have you actually profited $1,000,000 on a business or investment, income property, etc. and paid more than half of it to the U.S. government in income tax? I mean profit, not gross (before payroll and payroll taxes, etc.). Really? Really, really? Not just I'm an anonymous poster on the internet so who's gonna know really?
If you were to win $1,000,000 in the lottery, government would take more than half before you saw one penny. I wouldn't care so much about paying taxes that high on money I did not earn but if I had to earn that money it would be a different story.

That is the point I was making.

As for Buffet, he's one of the Jackasses I was talking about. Someone needs to remind him that there is no limit to the amount of money he can send to the government. Just because they only demand 17% doesn't mean he's not allowed to give them as much as he wants beyond that amount.

Comparing his income to that of his secretary is apples and oranges, he is taxed once at the corporate level, 2.5% and then he is taxed again on dividends and capital gains at 15%. His secretary is hammered with the Progressive income tax, like most of us are, and that's why she paid a higher % of her income than her boss.
 
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