[vpFREE] Re: Mega Million, great play!!! For the government. Not VP

 

There are very few things you can buy with pre-tax dollars, so it doesn't make much sense to consider the pre-tax value of the $2 you spend on a lottery ticket.


Pundits say the 1.6B 30-year annuity is worth about 905M as a lump sum payment.  The federal tax rate on that amount would be 37%, leaving 570M after tax.  State income tax will take another bite depending on where you live.  The odds are roughly 303M : 1.  If there is only a single winner it is a decent overlay.  Unfortunately there is a significant chance there will be multiple winners.  For a simple example, if you assume there is a 20% chance of two winners your jackpot equity would be (.8 X 570M) + (.2 X 285M) = 513M.

Caveat emptor.
Gamb00ler

whitejeeps said:

So U play with $ 2  that are taxed before U get it.  UP front the government gets a 50% hold  on the play. 

Winner gets 1000 million (1 billion).   Government nets roughly 1/2 of win in taxes . So odds about 1 chance in 302 million x $2 = 600 million.  On that exact scenario player makes 300million and government nets 300.

      300 mill lottery slice for selling

      150 mill lottery income tax

      120 mill estimated taxes on $ earned that were wagered

     ------   

     $570 million profit for states on $600 million hit???


I"m not a math guy.  How flawed is my quick calculation??


good luck to all that played.  Not a bad win!!   Jeep

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Posted by: gamb00ler@yahoo.com
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