PROVIDENCE, R.I. – People queuing up for Mega Millions tickets aren’t the only ones salivating over the record $540 million jackpot that could be won today – some state governments struggling through lean times know a hometown winner would bring a tax bonanza.
Taxes on a lump-sum payment option to a single winner could mean tens of millions of dollars of badly needed revenue that could go to restore entire social service programs on the chopping block, pay for hundreds of low-income housing units, forestall new taxes or hire more state troopers.
The jackpot climbed Thursday to the largest in history, according to officials in Rhode Island, one of 42 states where Mega Millions is played. If a lone winner took the lump-sum payout on the jackpot’s current amount, it would be an estimated $389.8 million.
I’d love it if a Rhode Islander wins, said Rep. Helio Melo, the chairman of the finance committee.
In Rhode Island, when the tax man comes calling for his 5.99 percent, that would mean an estimated $23.3 million, forked over in a single payment.
A big lottery windfall wouldn’t solve any state’s fiscal woes, but it could help chip away at debt, pay for one-time expenses or delay budget cuts or tax increases.
States set their own tax rates on lottery winnings. New York, for instance, charges 8.82 percent, while several, including California, charge none.
Ohio’s share of the lump-sum payout would be $23 million, hardly pocket change but still a fraction of the state’s $56 billion two-year budget.
We’re not holding our breath waiting for a tax windfall for the state, but we will always root for Ohio and Ohioans and hope lottery luck comes to a Buckeye, said Joe Testa, the state’s tax commissioner.