The USA Lottery
There is no National U.S Lottery, but there could be. Could the
"Lax." Think about it.
According to the United Kingdom (www.national-lottery.co.uk) dated 4/23/2015, over 33 million pounds are collected each week from players. That's an average amount of course. Given today's exchange rate, that is about 49,704,600 million dollars – each week. Stay with me here. I know you might have read how the UK seems to waste that extra money on art and social programs.
Sample Lottery Ticket
The United Kingdom has about 64 million people. I checked the deomgraphics and it appears that there are perhaps 50 million adults over the age of 18, in the Kingdom. Meaning that, a lot of them are of legal lottery ticket buying age or thereabouts.
A U.S. Lottery
The United States has over 318 million citizens. Again, the States have about 85 million kids, so adults number about 233 million. If the the ratio of population to lottery buyers is similar to that of the United Kingdom, the weekly average take for a United States National Lottery could be around 228 million. But let us shave off the 28 million and call it 200 million. No, let us divide that in half, make it 100 million.
Would You Buy National Lottery Tickets - if they were offered in the United States?
If you take 100 million dollars a week collected across all states and territories of the United States and add that up you get 5.2 billion dollars a year. Remember, I'm purposely low-balling that number. It could be closer to 10 billion a year. But let us be conservative here. I don't want you all excited.
Now this is interesting considering that the Internal Revenue Service of the United States collects about 2.4 trillion dollars a year in taxes. There is no way this small amount, from my proposed National Lottery, could begin to cover the total costs associated with what is spent each year by Uncle Sam. But that is not my aim here. This is an experiment after all. It's a 'Boil the Federal Frog' approach. Warm him till he falls asleep and the people are in control again.
My aim here is to compete with a portion of Social Security. The retirement part. This would be a phased-in voluntary savings lottery plan with options to deposit more (buy lottery tickets) if you wished. There would be no cap on savings, no matter the income or wealth levels of a person. There would be no taxation upon withdrawing your money at retirement age and there would be no set retirement age, so long as you had enough savings. But you would be the judge of that.
After tax dollars would go into the lottery plan and un-taxed proceeds would come out. It would be similar to a Roth IRA in these respects and would be 'saved' in the free market. The government would never control your money, after the 'middle man' stage. This would not be a government program, per se. They would only act as middle men – I'll explain in a bit.
The Center on Budget and Policy Priorities (http://www.cbpp.org/) indicated on March 11, 2015, that the total budget for Social Security was 851 billion dollars in 2014. We would not need to replace that budget. We would only seek to insure that when we retired we would have enough money to live on, without government support. The average monthly retirement benefit to Social Security retirees is about 1,329 dollars. That goes out to 39 million retired workers. When you do the math you find something rather interesting. The total dollars, on average, distributed to actual retirees is just shy of 52 billion a year - not 851 billion. Much of that money goes elsewhere. Still, that number, the 52 billion, is about 10 times higher than the low-ball figure that my proposed National Lottery would produce in a year – if the lottery kept 100% of all the sales proceeds. Lotteries don't keep that much, however.
"Voluntary" National Individual 'Lottery Retirement Account'
Here is how I envision the "Voluntary" National Individual 'Lottery Retirement Account' or LRA for short, would work. The middleman would be Uncle Sam. I would go to the store or log into my computer and purchase a lottery ticket with my registered encrypted password - from the government. This would give the National Lottery Department my account information for receiving monies. I could purchase any amount I wished. I would then wait until the lottery numbers were announced, preferably weekly, but other 'games' and days could be added later. I would check my lottery ticket to see if I had won or have the Department of Lottery just email me my results.
LRA's: (Rough Ideas)
- No minimum retirement age, if winnings will support basic lifetime income.
- No taxes on winnnings - ever
- 90% of each paid ticket's price is credit against Federal Taxes
- If LRA credit results, when you do your Federal Taxes, excess funds are sent to your personal Self-Directed LRA
- All growth/interest in LRA Accounts is tax free forever
- No limit on how much you can save in an LRA
- No 'Death Taxes, on LRA's – beneficies get them 100% intact and continue the tax free status forever
If I won anything, that amount would be transferred into my Lottery Account, by the Lottery Department in short order – tax free. If I had enough, say 10 million dollars, I could decide to retire early, not waiting for any mandatory retirement age. These ages are designed to make sure you keep working for as long as you can, so current Social Security recipients can receive monies anyway. Currently, as many of us know, there is no Social Security Trust Fund. It is a pay-as-you-go system. My earnings are taxed and that money then flows to Wilma down the street who is living on Social Security.
*Note: Tax Free means no Federal Taxes of any kind; however, if you by a car or a T.V., local taxes still apply.
So there it is. You keep 90% and you gamble 10%. But it's not a gamble, exactly. The 10% you sent to Uncle Sam helps defray Federal Lottery Department costs and supports general revenues. Or you could win millions or perhaps a billion?
If I chose not to retire after winning 10 million dollars I could take any amount from my LRA. For example, if I'm 54 and take 5 million of my total 10 million in winnings and go on a trip to Tahiti, I could do that, tax free. The LRA would be designed for flexibility, but not destruction. The idea is that you retain enough money – your own money – in your own account – for yourself, when you are old and feeble minded, remember? The idea also, is not to rely on Social Security Retirement, but yourself. But what other benefits would entice you to buy LRA tickets?
LRA accounts would not be heavily restricted. If you wanted to invest in pork bellies or gold, it would not matter. This is a free country, in that respect and you are free to take risks and succeed - or fail. As Social Security begins to fail or the retirement age goes out of the ball park, you may thank your LRA. If, on the other hand, you blew you LRA funds on fast cars and loose chicks, you better start panhandling or get a job – start over. The LRA does not force you to save, like I said before. You can squander it if you like.
Many of you will ask, "So how much will the government collect?"
Thinking back, if Social Security has an 851 billion dollar budget, how will an LRA compete. It does not compete. It works based upon the accumulation principle and the idea of reward – both at the same time. It makes you 'want' to pay your taxes – fast. Then you can accumulate and all the while you can earn big bucks – tax free – if you win the lottery. If you don't win the lottery, any money you have accumulated from your tax credits plows into your LRA, where it just rolls over and over. Interest collects. Stocks split and so on. Uncle Sam is happy that he can pay his bills faster.
Obviously, this is whole idea is just an exercise in 'lottery applications', but it could have potential. It would be completely voluntary. The collection of monies from tickets are 90% early paid taxes leading to tax credits, for you. Excess credits rollover into you LRA. You can win big if you pick the right lottery numbers. Winnings would be tax free. All the while you are building a nest egg. You self-direct your monies.
You decide to purchase a 10 dollar National Lottery Ticket every week. By the end of the year you have earned a tax credit of 468 dollars. That is 90% of the 520 dollars you spent. But you did not win anything. At the end of the year you do your taxes. The IRS sends 468 dollars to your tax-free LRA. Remember, you paid extra 'taxes' when you bought National Lottery Tickets. But also remember, if you owe taxes, your tax liability was just reduced by 468 dollars.
You spend 50 dollars a week on National Lottery Tickets. Through the year you hit three small jackpots. One for 20 dollars, another for 8 and one for 300 bucks. Since you spent 50 bucks a week, your 90% tax credit by the end of the year would be 2,340 dollars to offset any taxes due and if you set up your taxes correctly, that 2,340 dollars slides into your LRA. But there is more. With your winnings, the 20, 8, and 300, you made 328 extra dollars. That is a tax free bonus deposited, automatically, into your LRA. So actaully, you have added 2,668 dollars to your LRA, 328 dollars of which bypassed Uncle Sam. Remember, all winnings escape all taxation – unless you owe Uncle Sam a bunch of dough from past mistakes. Then I can't help you.
You bought one ticket for a dollar and won 10 million dollars. The National Lottery sends the money to your LRA, minus any old taxes due from income received before your winnings. If you are up to snuff, you just won 10 million dollars, tax free. Oh, and 90 cents will be used as credit against any taxes you owe for the year, since you spent a whole dollar on the ticket. Why don't you buy a new car or two?
These are just possibilities. In reality, the government may insist on an 80/20 split. That still would not be so bad for a National Lottery, where I could win a cool billion. The idea here is two fold. First, that there are more ways to solve taxation issues then can be imagined and secondly, there are ways to make these things work – voluntarily. Especially given the right rewards.
In the end, however, this does not solve the over-spending by government or the electronic printing presses running day and night, not to mention the borrowing from our 'frenemy': China. It isonly a figurative 'foot in the door' to a better place. An idea for a better – voluntary – future that does not yet exist. Just saying.