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Pennsylvania lottery wins to be taxed, if legislation passes

Pennsylvania LotteryPennsylvania Lottery: Pennsylvania lottery wins to be taxed, if legislation passes
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Winning the Pennsylvania Lottery may be a little less lucrative in a proposal that would allow the state to take a share of the jackpot through income tax.

Currently, such winnings are exempt from the state's personal income tax.

What does that mean in practice?

Let's use January's $1.5 billion Powerball jackpot as an example. For those who opted for the hypothetical lump sum — the final $1.6 billion take was split between three winners — of about $940 million, the feds would withhold a combined 40 percent. That means a payday of $564 million.

While many other states take up to 15 percent, Pennsylvanians live in one of two states that have no such tax. The other state is California.

But a proposal that passed the House Gaming Oversight Committee on Tuesday would allow Pennsylvania to take income tax out of lottery winnings.

At the current rate of 3.07 percent, that would mean giving up $46 million of the hypothetical $1.5 billion jackpot.

For Rep. John Payne, who chairs the House committee, taxing lottery winnings is a matter of consistency.

"Gaming is gaming," he said. "I'm still struggling on why we ever did not tax lottery winnings. The flip side of that is: So, I don't tax lottery. Then we shouldn't tax small games and we shouldn't tax casino winnings."

Every other form of gaming is taxed in one form or another, said Payne, R-Hershey. The Lottery shouldn't be any different, he said.

It's also a matter of priorities.

"If I have a choice between taxing a lottery winning and raising your income or sales tax, I like this option a lot better," Payne added.

Not everyone chooses to participate in gambling, he said. But residents don't have a choice in whether they pay income, property or sales taxes.

The proposal, however, does have opponents.

Rep. Nick Kotik, D-Robinson Twp., voted to move the proposal on to the House Finance Committee but said he would not support it if it reached the House floor. Removing the tax exemption could be a disincentive for players because it's one more tax they have to pay, he said.

"It's just too much," he said. "I think if someone wins the Lottery, they already have to pay federal tax... I don't think that we need to nitpick on lottery winnings."

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21 comments. Last comment 9 months ago by sully16.
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whiteballz's avatar - Lottery-015.jpg
Nutley, New Jersey
United States
Member #131058
August 1, 2012
875 Posts
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Posted: March 15, 2016, 5:08 pm - IP Logged

Big mistake if legislation passes.

.

    Raven62's avatar - binary
    New Jersey
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    Member #17843
    June 28, 2005
    49642 Posts
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    Posted: March 15, 2016, 5:33 pm - IP Logged

    When NJ enacted this policy they made it retroactive to the beginning of the year!

    A mind once stretched by a new idea never returns to its original dimensions!

      DEE88's avatar - animal doggy2.jpg
      PA
      United States
      Member #69849
      January 18, 2009
      14837 Posts
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      Posted: March 15, 2016, 6:41 pm - IP Logged

         Not looking good for PA...No No

             2079    1085   8841    7227   3305   4651

        mypiemaster's avatar - 2015021003pileofcash
        JACKPOT HUNTER

        United States
        Member #141034
        April 2, 2013
        1408 Posts
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        Posted: March 15, 2016, 6:46 pm - IP Logged

        Thumbs DownNo surprises there. You knew that was coming.

        Seek and ye shall find -Matt. 7:7 ...Ask and ye shall receive -John 16:24 ...Give and it shall be given unto you -Luke 6:38 ...Be careful what you ask for!!! -Mypiemaster 1:1

        Having Money Solves Problems That Not Having Money Creates Yes Nod ****John Carlton****

          ArizonaDream's avatar - Lottery-009.jpg

          United States
          Member #169277
          October 10, 2015
          630 Posts
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          Posted: March 15, 2016, 7:43 pm - IP Logged

          For Rep. John Payne, who chairs the House committee, taxing lottery winnings is a matter of consistency.

          "Gaming is gaming," he said. "I'm still struggling on why we ever did not tax lottery winnings. The flip side of that is: So, I don't tax lottery. Then we shouldn't tax small games and we shouldn't tax casino winnings."

          Every other form of gaming is taxed in one form or another, said Payne, R-Hershey. The Lottery shouldn't be any different, he said.

           

          The part they seem to be forgetting is that the state is already taking 50% (assuming PA is a 50% state) off the top of every  dollar spent on lottery tickets. 

          Isn't that enough for them?

            TheGameGrl's avatar - character catafly.jpg
            A long and winding road
            United States
            Member #17084
            June 10, 2005
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            Posted: March 15, 2016, 9:32 pm - IP Logged

            When NJ enacted this policy they made it retroactive to the beginning of the year!

            If and (most likely WHEN) this gets signed, it will be from this past June 2015 onwards.

            I recall the fiasco in NJ when that happened there, some one was a Powerball winner and she fought the case....

            Might as well start going cash instead of annuity, cuz Taxes always go up ...might as well take the lowest hit.....

            ~~Is it true, Is it kind,Is it necessary. ~~~

             Thanks be to the giving numbers: 1621,912,119 02014

              Groppo's avatar - cat anm.gif

              United States
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              January 7, 2015
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              Posted: March 16, 2016, 12:19 am - IP Logged

              Thumbs DownNo surprises there. You knew that was coming.

              Mr./Ms. MyPieMaster,


              Yes, I did.

               

              Mr. Groppo

              • Don't chase the numbers you play.
              • Play only numbers you've already played, plus however many random picks.
              • But, ALWAYS the regular numbers you play.  This will make you a winner, not a chaser.
                        (so far, though, I've yet to win any significant lotto prize)
                Groppo's avatar - cat anm.gif

                United States
                Member #162631
                January 7, 2015
                502 Posts
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                Posted: March 16, 2016, 12:21 am - IP Logged

                But, this is really stupid.  Didn't the powers-that-be know this from the start?

                And now they're acting like "why not tax them/it as well?"

                Go ahead, tax the pants off everybody - see if I care?
                (well, I would care, only I know I can't do anything about it)

                Come on, we're not ALL stupid.

                I don't play in your doggone state anyway.

                • Don't chase the numbers you play.
                • Play only numbers you've already played, plus however many random picks.
                • But, ALWAYS the regular numbers you play.  This will make you a winner, not a chaser.
                          (so far, though, I've yet to win any significant lotto prize)
                  Avatar

                  United States
                  Member #72894
                  March 30, 2009
                  27 Posts
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                  Posted: March 16, 2016, 1:17 am - IP Logged

                  Why are ANY lottery winnings taxed? If I convinced a million people to give me $100 there would be no taxes on the $100 million. But because the money goes thru the state, it gets taxed a second time. Once when earned and again when the lottery hits...

                    Avatar
                    Franklin-n.c
                    United States
                    Member #37194
                    April 12, 2006
                    35 Posts
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                    Posted: March 16, 2016, 3:41 am - IP Logged

                    first your Job goes to China and Mexico so they got to get the money from some place that's our Government US Flag

                      music*'s avatar - nw bookeep.jpg
                      Happy California
                      United States
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                      August 2, 2014
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                      Posted: March 16, 2016, 7:47 am - IP Logged

                      first your Job goes to China and Mexico so they got to get the money from some place that's our Government US Flag

                      I Agree! and now vote!

                       I've been rich and I've been poor. Believe me, rich is better. 

                       Attributed to Joe E. Lewis and others


                        United States
                        Member #106134
                        February 13, 2011
                        806 Posts
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                        Posted: March 16, 2016, 9:32 am - IP Logged

                        Seems like lottery winners are so persecuted nowadays.

                        The Government is greedy and stupid, don't they know if they start taxing lottery winners at 99% (like they want to) that people will stop playing altogether because it's no longer worth it? lol

                          Avatar
                          PA
                          United States
                          Member #129849
                          June 29, 2012
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                          Posted: March 16, 2016, 10:11 am - IP Logged

                          The PA lottery has got so tight over the past few years, with it being really bad lately,

                          that this might be the final straw for a lot of us.... especially the people playing instant

                          tickets.

                           

                          While I don't think it's "initially" that big of a deal..... 3.07% isn't that bad, the problem

                          is once they get their fingers in the cookie jar they will soon enough be shoving both hands

                          the whole way in. The tax system is a joke as it is. The amount of tax money I paid out last

                          year is sick.

                           

                          I worked very hard for five years of my life getting a good education that is costing me a lot

                          of money each month. On top of that, it took me two years after I graduated to find a good

                          job in the field that I got a degree in. In those two years, I worked a lot of fairly lack luster and

                          very under paying jobs just to keep myself afloat. Now that I have a good job, I pay out almost as

                          much money in taxes as I took home the year before.

                           

                          I think truly the only people who aren't screwed in this world any more are the people who don't work

                          and live off the system and the rich people. Anyone else gets bent over backwards and taken for a ride.

                            Deo-nonfortuna's avatar - hqdefault
                            NJ
                            United States
                            Member #165922
                            April 27, 2015
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                            Posted: March 16, 2016, 2:13 pm - IP Logged

                            Big mistake if legislation passes.

                            Believe me this won't pass. PA politicians debated about turning over lotto to a British firm for years but never did.