Tuesday, January 12, 2016


I'm assuming that no supporters of Bernie Sanders are playing the PowerBall Lottery this month.  Winning $1.4-BILLION won't just make you a member of the hated 1%, it will put you into the category of the especially-vile .1%.  I am also yet to see anyone on social media post that they hope they win PowerBall so they can give 95% of that money to the Federal Government "because they would do a better job of spending it than I would. #feeltheBern".

Sanders supporters should actually be out protesting at lottery outlets across the country, as the way the game works is an exact replica of the economic model they claim to despise and want to replace with collectivism.  Millions of people fork over their money and one or two people end up with all of the cash in the end.  It's the epitome of "distribution inequality"  Except, in the case of the lottery, people don't come home with cheaper groceries and clothing, new cars, the latest technical gadget or the ability to put off paying for those items month after month for what they pay to the "evil corporations".  Instead, you buy a PowerBall ticket and all you get is colorful piece of worthless paper.

Of course, the lottery is not all bad for supporters of bigger government and soaking the rich.  Not every dollar goes to the jackpot.  A large percentage of revenues goes to fund the government bureaucracy that operates the lottery.  Most states also keep some of the proceeds to fund public education, conservation or property tax relief. 

And just like most government programs, the lottery doesn't actually deliver what it promises.  While the jackpot promises to be $1.4-BILLION, if you want all of that cash right away--instead of in thirty annual installments--you will only get $868-MILLION--meaning the Government nets 38% of the promised prize for your impatience.  And as soon as you pose for the pictures with the giant check, Uncle Sam swoops in and immediately withholds 25%--or in this case, $217-million--as a down payment on this year's taxes.  If you live in a state with personal income tax, they will also collect their 4-9% immediately--lest you move to a state with no income tax immediately after cashing the big prize.

And when April 15th rolls around, the IRS is back for its remaining 14.5%--since you are now in the highest tax bracket.  Of course, that could become an additional 70% if Senator Sanders were to actually get his propsed tax brackets actually approved by Congress--or another 4% under the plan announced by Hillary Clinton just yesterday.  Putting all of that cash into investments and living off the returns for the rest of your life will cost you an additional 18% (the current capital gains tax rate--which would also skyrocket under Senator Sanders' economic plan).

So even though Uncle Sam isn't buying a single ticket for Wednesday's drawing--he is going to be, far and away, the biggest winner on the night.  And you wonder why financial experts call the lottery a "tax on the stupid".

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