this post was submitted on 29 Jul 2023
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Kinda has a stench of "the wealthy get taxed too much π’"
The IRS doesn't get that money. The IRS processes that money and prevents your lottery-ticket-buying-ass from hoarding it all, and redistributes some of that unnecessary wealth to the utilities and services were all invested in together as a society.
If only actual billionaires got taxed that much...
This is what happens if you take it out as a lump sum. If you choose to take your winnings over an extended period of time (20 years or something), it is taxes more like income.
That said, I totally agree with you!
A significant amount is "lost" when you get immediate payout versus the annuity. The lottery will invest and be able to pay out more over the thirty years, thus they offer less the the lump sum
On 1.2 billion over 30 years, the average tax rate will not be significantly different year to year vs the avg tax rate on a lump sum.
The poor smuck probably claimed the lottery as an individual. He should have opened a company and claimed the ticket so that he can expense out a lot of his taxable income
/s
I am 99% sure this is not how it will work in this specific scenario but does otherwise when itβs business as usual.
Sadly, the IRS isn't properly staffed or equip to go after rich people...
Yeah good thing they take it from lottery winners up front.
I heard this eloquent way of saying it the other day:
The IRS doesn't have the money to go after people with money.
Like schools