Taxes

Megamillions Mania Hits State Governments

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States troubled by profligate fiscal policy and an ongoing economic downturn, reports the Associated Press, are looking toward the savior of dreamy suckers everywhere: the lottery! (The cash one, not the get-to-kill-someone one.)

Excerpts from the maw of slavering tax hunger:

People queuing up for Mega Millions tickets aren't the only ones salivating over the record $540 million jackpot that could be won Friday — some state governments struggling through lean times know a hometown winner would bring a tax bonanza.

Taxes on a lump-sum payment option to a single winner could mean tens of millions of dollars of badly needed revenue that could go to restore entire social service programs on the chopping block, pay for hundreds of low-income housing units, forestall new taxes or hire more state troopers…..

States set their own tax rates on lottery winnings. New York, for instance, charges 8.82 percent, while several, including California, charge none.

Mega Millions Logo

Ohio's share of the lump-sum payout would be $23 million, hardly pocket change but still a fraction of the state's $56 billion two-year budget.

"We're not holding our breath waiting for a tax windfall for the state, but we will always root for Ohio and Ohioans and hope lottery luck comes to a Buckeye," said Joe Testa, the state's tax commissioner….

The Rhode Island Association of School Committees has asked the state to use the $17 million for technology and wireless Internet in schools. That would be in place of a $20 million bond.

Gov. Lincoln Chafee has said the state, which is facing a $117 million budget shortfall next fiscal year, can't rely on those lottery winnings — and, of course, no state can. But his director of administration recently weighed in, saying of the tax payment: "We're happy to collect it."

Greg Beato on the lottery and the welfare state from last year.

Reason's state fiscal crises archives.