Pennsylvania lottery wins to be taxed, if legislation passes

Mar 15, 2016, 4:02 pm (21 comments)

Pennsylvania Lottery

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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Comments

whiteballz's avatarwhiteballz

Big mistake if legislation passes.

Raven62's avatarRaven62

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

Dee88's avatarDee88

   Not looking good for PA...No No

mypiemaster's avatarmypiemaster

Thumbs DownNo surprises there. You knew that was coming.

ArizonaDream's avatarArizonaDream

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 avatarTheGameGrl

Quote: Originally posted by Raven62 on Mar 15, 2016

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.....

Groppo's avatarGroppo

Quote: Originally posted by mypiemaster on Mar 15, 2016

Thumbs DownNo surprises there. You knew that was coming.

Mr./Ms. MyPieMaster,


Yes, I did.

 

Mr. Groppo

Groppo's avatarGroppo

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.

rooster8786

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...

ronki

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 avatarmusic*

Quote: Originally posted by ronki on Mar 16, 2016

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!

jjtheprince

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

GetReal720

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

Quote: Originally posted by whiteballz on Mar 15, 2016

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.

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