Lottery winners usually have a choice of getting their winnings paid out over the course of twenty or thirty years, or as one lump sum. If they take the lump sum the winner only gets about half of what they would with the annual payments. So assuming this guy took the lump sum and got $1B the tax would be closer to 60%. Still a lot, but $450M is nothing to sneeze at.
Getting the money over 20 years seems so stupid, it won’t give you any interest and over 20 years just because of inflation it will be probably worse than 50% less…
And yet at 40 million a year, I don’t think inflation is going to bother you ever again. That’s good advice for relatively small payouts like 10k, but at a certain point the annuity becomes an effectively unlimited credit line.
That depends entirely on how good you are at managing your money. With regular payments you’d still have a ridiculous amount of money even the first month, and no matter how badly you fuck up you’re still rich 20 years from now.
The merits of lump sum versus annuity aside, the point is that the headline number comes from a naive total of how many payments are made in the annuity option. So when it’s listed as a $2 billion jackpot, it’s actually worth something closer to half of that as a lump sum.
That wouldn’t work to reduce lottery taxes. The lottery itself isn’t return on investment in stocks or whatever, and can’t be held indefinitely the way an appreciating stock can.
Lottery winners usually have a choice of getting their winnings paid out over the course of twenty or thirty years, or as one lump sum. If they take the lump sum the winner only gets about half of what they would with the annual payments. So assuming this guy took the lump sum and got $1B the tax would be closer to 60%. Still a lot, but $450M is nothing to sneeze at.
Getting the money over 20 years seems so stupid, it won’t give you any interest and over 20 years just because of inflation it will be probably worse than 50% less…
And yet at 40 million a year, I don’t think inflation is going to bother you ever again. That’s good advice for relatively small payouts like 10k, but at a certain point the annuity becomes an effectively unlimited credit line.
Plus, if the company goes out of business, you’re fucked.
At least in my state, the lottery is run by the state government. The taxes from it go to schools.
Dozens of people have gotten a chuckle out of this over the years. dozens!
I mean, the taxes from the lottery do. What that don’t tell us is the taxes originally earmarked for schools now go to something else.
That depends entirely on how good you are at managing your money. With regular payments you’d still have a ridiculous amount of money even the first month, and no matter how badly you fuck up you’re still rich 20 years from now.
Unless the government collapses in the next 20 years and can’t pay it.
If the government collapses then your money is worthless anyways.
Oh, there’ll still be a government. But they may not be willing to ship his checks to the labor camp.
The merits of lump sum versus annuity aside, the point is that the headline number comes from a naive total of how many payments are made in the annuity option. So when it’s listed as a $2 billion jackpot, it’s actually worth something closer to half of that as a lump sum.
Yup, you’d be far better off doing doing the “buy, borrow, die” strategy and never paying taxes like other rich people
https://www.dcfpi.org/all/how-wealthy-households-use-a-buy-borrow-die-strategy-to-avoid-taxes-on-their-growing-fortunes/
That wouldn’t work to reduce lottery taxes. The lottery itself isn’t return on investment in stocks or whatever, and can’t be held indefinitely the way an appreciating stock can.
Yeah I was referring to specifically taking a lump sum and what to do with it as opposed to taking the payment plan
Looks like the taxes are closer to 37.5%
https://lemmy.world/comment/15540664