Comments on: NJ Applies Retroactive Tax To Lottery Winners

By: How the lottery is a tax on the stupid. - debt, loans, credit cards, banks, insurance... - Page 3 - City-Data Forum

Sun, 02 Oct 2011 18:25:57 +0000

[...] would have have a 35% (subject to change) federal tax obligation, plus state tax (subject to retroactive legislation), for that tax [...]

By: Paul

Paul — Sun, 29 Aug 2010 16:20:43 +0000

To be honest I have no idea why they don’t tax UK gambling earnings because we obviously have a massive shortfall in our government’s banks and they’re destroying us through taxes rising and benefits being slashed.

By: Mark

Mark — Sat, 14 Nov 2009 22:48:24 +0000

It’s bad enough taxing lottery winnings anyway – some countries still pay out big prizes without any taxation. Needless to say backdating tax on winnings straightforward sucks.

By: Jim

Jim — Fri, 23 Oct 2009 21:02:58 +0000

If the State really wanted to generate income, it would tax at the point of sale, just as they do with other “sin” taxes. What an idiotic law.

By: Ralph

Ralph — Fri, 31 Jul 2009 18:52:35 +0000

New Jersey is such a corrupt state. Everyone else has to manage their household budgets by reducing spending and by looking for more efficient ways to survive. But the State does not have to be efficient. It can vote itself more money– thereby taking away funds needed in households for basic survival. Whenever a government agency enacts a new tax, it doesn’t mean it’s going to function any more efficienty– it allows for more spending. Look at all the revenue the government takes in…but it never ends a program…makes cutbacks…reduces spending or benefits. The taxpayer? They cannot vote themselves a bigger paycheck. Politicians are ruining our way of life.

By: lotto syndicate

lotto syndicate — Tue, 28 Jul 2009 05:05:05 +0000

This is really nice…..It is often quipped that the lottery is a tax on stupidity . I’ve always been bothered by this for two reasons: 1) one of the first people who said it to me was an arrogant professor who I always enjoy proving wrong, and 2) someone in my family (who has an advanced degree in mathematics) used to (and may still) play the lottery. So I figured there must be some fallacy in this statement.

By: Jay Starkman CPA

Jay Starkman CPA — Wed, 22 Jul 2009 23:32:07 +0000

The ex post facto prohibition applies only to criminal retroactive laws, an accident of early Supreme Court interpretation of the Constitution.
The 1864 Civil War income tax increase was an emergency war measure, which retroactively applied to 1863 income. The 1913 Tax Act was enacted on October 3, and took effect on November 1, retroactive to March 1, four days after the Sixteenth Amendment was ratified. Stockdale v Atlantic Ins. Co., 87 US 323, 331 (1874) (1864 retroactivity); Brushaber v Union Pacific R. Co., 240 US 1 (1916) at 20 (1913 retroactivity).

New Jersey has a reputation as a notoriously difficult state for a taxpayer
to prevail in a dispute with the Division of Taxation. This is not a completely new tax, just removal of the income tax exemption for NJ lottery winnings. So, limited retroactivity is generally permitted.

The state has recent experience with retroactive tax increases. NJ
enacted a law on July 1, 2002 increasing the estate tax retroactive to
January 1, 2002. Cynthia Oberhand died on March 28, 2002 and her
estate was assessed an additional $25,915.49 estate tax as a result of
the retroactive law. The state Tax Court held that the retroactive law
was constitutional. Yet, in a big surprise, it ruled in favor of the estate.
The court applied the equity principle of “manifest injustice ” to
prevent application of a tax law which did not exist at her death. The
appeals court reversed in favor of the state, saying “the doctrine of
manifest injustice has no place in the judicial evaluation of retroactive
tax laws.” The New Jersey Supreme Court sided with the taxpayer,
agreeing with the Tax Court that retroactive application was manifest
injustice. Oberhand v Director, 22 NJ Tax 55, 2005 STT 68-45 (Tax Ct Dkt No 004-150-2003, 2/23/05), 23 NJ Tax 431, 907 A2d 428, 2006 STT 196-17 (App Ct Dkt Nos A-3886-04T2 & A-4243-04T2, 9/26/06, 2008 NJ Lexis 110, 2008 STT 41-14 (NJ Sup Ct, Dkt. A-106 (Sep Term 2006), 2/27/08).

Oberhand was based strictly on equity relief because the same NJ Tax Court Judge Harold A. Kuskin ruled three months later that this retroactive law was not manifest injustice under slightly different facts where the tax resulted from a disclaimer by the beneficiary. That retroactive tax was not triggered by the decedent. Rappeport v Director, 2005 STT 152-15 (Tax Ct Dkt No 003893-2003, 6/27/05). (When the 1894 income tax was before the U.S. Supreme Court the second time, it considered
whether the tax was unconstitutional or manifest injustice. It opted for unconstitutional.) Anyway, Judge Harold Kuskin retired in June, so there may be no champion for challenging this tax.

By: Eric

Eric — Fri, 17 Jul 2009 02:49:15 +0000

The words “retroactive” and “tax” should never be used together. It is grossly unfair. Would it have killed them to say “from now on” ?

By: NJ Applies Retroactive Tax To Lottery Winners — taxgirl « Taxes Income

NJ Applies Retroactive Tax To Lottery Winners — taxgirl « Taxes Income — Thu, 16 Jul 2009 19:51:32 +0000

[...] Read the original here: NJ Applies Retroactive Tax To Lottery Winners … [...]

By: J G

J G — Thu, 16 Jul 2009 17:05:37 +0000

I suggest the victims of NJ organize a 1 day lottery strike. The loss of revenue from 1 lost day of ticket sales would almost certainly wipe out any tax gain from the winners. You’ve got to deny the state what it wants – money.