Hey, why are Lottery winners taxed. Isn't that a double tax like Dividends. All the lottery players are taxed going in, and the lottery game is essentially a revenue for the State, so why are the lottery earnings taxed again. Isn't that double dipping? I'm probably missing sumpin here,,,not knowing a lot about taxes, so thought I'd ask.
Lotteries are run by the govt as an alternative revenue stream for the state. Not quite the same as betting at a private corporation casino. You are essentially giving the state revenue by playing their tax game, no?
You aren't taxed twice on lotto winnings. The money may have been taxed at some other time when it was owned by someone else, but you purchased something with your money. That was the end of the transaction. Any money you then receive as a result of that purchase is a separate transaction and is only taxed once. Dividends are the same dollar, earned by the same person, being taxed twice in the form of corporate taxes (a company owned by the stockholder) and then individual taxes.
Well the rule is that any type of income is taxed. No matter how you make money, it will be taxed. Lottery winnings are income so they sould be taxed. The difference with dividends is that the same income is being taxed twice. The Corporation is first taxed for making income, then it is once again taxed for giving that income to the shareholder. In the lottery, you are being taxed on the purchase then on the income, so it's a different situation.
http://slate.msn.com/id/2069202 The chief argument of those who advocate eliminating taxes on dividends is that they are subject to "double taxation." Shareholders pay taxes on dividends at the rate their ordinary income is taxed. And corporations cannot deduct dividends from their taxable income, meaning they pay taxes on them, too. Does that mean that dividends are double taxed? Only if you subscribe to the belief that corporations don't pay taxes, people do. Under this theory, since a company's profits are ultimately distributed to owners and shareholders in some form—dividends, profit sharing, salaries, or capital gains—any tax on corporate income, or any limits on the deductibility of items from taxable income, in effect taxes the same dollar of profits twice. This only makes sense if, like Treasury Secretary Paul O'Neill, you don't draw a distinction between a corporation and the people who own it. "The corporations and businesses are just an intermediary between the citizens and the government," he said in an interview last year. (The logic of this dogma naturally leads its faithful to advocate abolishing the corporate income tax, as O'Neill does.) But the double-taxation argument reflects a flawed understanding of what corporations do and why they are formed. Corporations are distinct entities. They are not merely passive conduits of cash. They are legal beings, chartered by states to perform certain objectives. They possess all sorts of prerogatives, rights, and protections not afforded to individuals. That's why people form corporations, and that's why it is just for corporations to pay taxes on their income. Too frequently, CEOs like O'Neill have failed to differentiate between themselves as individual citizens and the companies they run. (That may explain why Tyco's Dennis Kozlowski and Enron's Kenneth Lay thought there was nothing untoward about using their corporate treasuries as ATM machines.) Besides, if we want to put dividends and capital gains on the same footing, the answer isn't to stop taxing dividends, it is to normalize the tax rates on capital gains so they are taxed just like other forms of income. Why create more invidious distinctions between different types of income? Essentially, if you want the benefits of corporation status, you have to pay for it. TANSTAAFL, even if you are rich enough to benefit from dividend checks.
Yeah, but basic income tax theory, from what I recall, doesn't really make those distinctions. It's pretty much, "were you made better off?" if the anwer is yes, then you owe tax, regardless of the source. But to absolutely answewr your question, it probably is a form of double taxation, although that is an extremely fluid term which can mean pretty much anything. But then I guess as an interest group, your lottery winners are too busy spending money to band together and lobby against it!
Huh? I don't get it. This doesn't even deal with the issue. It only pretends to. If you want to argue that "if you want the benefits of corporation status, you have to pay for it," fine, argue that. But at least acknowledge that the same income is being taxed twice. That is a fact, not a political viewpoint.
did you guys know they are changing Lotto Texas next month to make it harder to win? There will be a "bonus ball" like in Powerball type games.
In reality having a tax on the corporate part and the individual part is a way to balance the collected tax across regular investments and tax-deffered/sheltered investments. For example, if I take the assumption that the taxes on dividends is "double taxation" and this is wrong, then I would be fine with just eliminating the "individual" part entirely and increasing the corporate part the respective amount. Then of course you would want to have tax credits or tax breaks for when corporations send dividens to 401Ks, IRA, education savings plans, etc--but that is more complicated than the current 'double taxation" system. Want an even simpler and better solution? Why don't you eliminate the corporate rate entirely and increase the individual rate to cover for lost revenue. Then this is further incentives for people to use IRAs, 401Ks, etc., because then they pay no direct or indirect taxes of dividends. I am surprised the admin hasn't thought of this
