• foggy@lemmy.world
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    1 year ago

    Kinda has a stench of “the wealthy get taxed too much 😢”

    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.

      • runner_g@lemmy.blahaj.zone
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        1 year ago

        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!

        • wolfpack86@lemmy.world
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          1 year ago

          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.

      • scifu@lemm.ee
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        1 year ago

        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 it’s business as usual.

      • rifugee@lemmy.world
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        1 year ago

        I heard this eloquent way of saying it the other day:

        The IRS doesn’t have the money to go after people with money.

    • Kecessa@sh.itjust.works
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      1 year ago

      Yep, that’s the real issue!

      Over here it’s not taxed so prizes are smaller but they represent reality!

  • Got_Bent@lemmy.world
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    1 year ago

    So we do all realize that advertised jackpots are annuitized amounts and that the vast majority take the net present value lump sum, which is usually about half the advertised amount, right?

    Winner probably got about six hundred million, of which roughly forty percent was taken for taxes give or take state income tax rates.

    • nogooduser@lemmy.world
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      1 year ago

      Not being from the US I didn’t know that. That takes something from being completely unreasonable to be understandable.

      I can’t believe some fake rich guy on the internet lied to us!

      Still, if they’re not idiots the winner doesn’t have to work again so they’re still good.

      • 4ce@lemm.ee
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        1 year ago

        That takes something from being completely unreasonable to be understandable.

        Why would taxing a gross income of above a billion US$ by ~66% be “completely unreasonable”? Imo taxes for such incomes should generally be higher if anything.

    • JokeDeity@lemm.ee
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      1 year ago

      I was with you till the last paragraph. The numbers are already there for you, so I don’t know where 6 hundred million came from.

      • Got_Bent@lemmy.world
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        1 year ago

        The $1.28 billion is if you take monthly payments over a term of twenty or thirty years.

        Very few people do that.

        Instead, they take an up front lump sum payment.

        That up front payment is the amount the lottery commission would put into interest bearing bonds to pay out over time, getting to the $1.28 billion.

        The lump sum payment is usually about half the amount you would receive if you took payments over time. If this doesn’t make sense, it’s a tangential discussion on the time value of money and its net present value.

        I got six hundred million by cutting $1.2 billion in half since this is casual Internet discourse, and I consider very rough cocktail napkin math for illustrative purposes to be perfectly acceptable.

        • BigJim@lemmy.world
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          1 year ago

          Damn I think I would take the monthly payments. I wouldn’t complain about ~$3m a month for 30 years. Whatever problems you have that money would resolve would probably be resolved in the first month.

    • CAPSLOCKFTW@lemmy.ml
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      1 year ago

      The IRS is chronically underfunded. They can’t keep the money, it goes to Aunt Sam.

      And btw the IRS has not enough staff to investigatevif rich people pay their fair share, therefore they go mostly for normal people.

      • Snipe_AT@lemmy.atay.dev
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        1 year ago

        Just wanted to point out that the IRS audit rates for the rich are higher than normal people.

        [Jay McTigue:] Well, as I said, higher-income taxpayers are indeed being audited at a higher rate than lower-income taxpayers. In fact, the highest-income taxpayers, those making $5 million or more a year, right now are being audited at about 2.3%. Whereas on average the audit rate is less than 1% So there is still a focus on the higher-earning individuals.

        source: https://www.gao.gov/assets/730/720478.txt

        edit: pulled another GAO report bolstering my argument:

        From a report on 2019 data:

        “Although audit rates decreased more for higher-income taxpayers, IRS generally audited them at higher rates compared to lower-income taxpayers, as shown in the figure. However, the audit rate for lower-income taxpayers claiming the Earned Income Tax Credit (EITC) was higher than average. IRS officials explained that EITC audits require relatively few resources and prevent ineligible taxpayers from receiving the EITC.”

        source: https://www.gao.gov/products/gao-22-104960


        Please ignore my negative initial vote score, as I have the privilege of being bot-downvoted by CCP sympathizers because of comments on this post https://lemmy.world/post/2338419, there is also the possibility that I’m just an asshole.

        • Bonehead@kbin.social
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          1 year ago

          Just wanted to point out that the audit rates for the rich are higher than normal people.

          As it should be. The problem is that the rate should be 10 times higher than it currently is.

        • BeegYoshi@lemm.ee
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          1 year ago

          the misleading thing about that statistic is that there are far, far fewer wealthy people than there are normal. even with the rate of audits technically being lower, the number of audits of normal people is still far, far greater, and is where the IRS’s focus truly is