The Powerball numbers were 9-12-22-41-61-25. But with no jackpot winner, Aug 30 drawing is likely to exceed $1 billion, but $325 million after taxes. Is that equitable?
Is Powerball equitable?
On Wednesday night, millions of Americans tuned into Powerball.com to watch the winning numbers get drawn – 9-12-22-41-61-25. Many of whom had their eyes on an estimated $850 million jackpot.
The sheer size of that number is staggering for a $2 ticket price, and it’s by design. Huge lottery winnings spark excitement, and a flurry of buyers hoping to have a small, albeit very small, chance at winning.
There was no jackpot winner on Aug 27, pushing the Aug 30 drawing to (likely) exceed $1 billion, it is now at $950 million.
But the reality behind the jackpot number paints a far more complicated and somewhat unfair picture for the winner. By the time federal and state taxes are applied, if you choose the lump sum payout—the option most winners prefer— your take-home on $850 million shrinks to roughly $242 million (depending on the state you live in, etc.). While still a life-changing number, the gap of $600+ million between the advertised jackpot and the actual cash in hand raises an important question: is Powerball truly equitable, or is it a system built on illusion and inequality?Jackpot Vs. Reality
$850 million represents unimaginable wealth. But the full amount of the jackpot is available only as an annuity paid out over 30 years. That means roughly $27.2 million annually—before taxes. (It increases 5% annually each so the value will vary)
With that being the case, most winners select the lump sum option on their tickets, which comes out to $384 million before taxes. From there, a 24% mandatory federal tax withholding is subtracted, cutting the price to $279.6 million. If the winner falls into the top federal tax bracket of 37%—which they almost certainly will—another tax is taken, reducing the total to around $231.
