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The Expansionist
Saturday, June 27, 2009
Government Stealing Twice. AOL hilited today a story about South Carolina's being about to confiscate the winnings of a person who bought a state lottery ticket:
Lottery rules require the ticket holder to show up in person within 180 days of the drawing to claim the prize. That makes the deadline July 1.

Whoever has the ticket must get to one of the state's claim centers — in Columbia, Greenville and Mt. Pleasant — before 4 PM next Wednesday. If they don't, the money will go into the legislature's "Unclaimed Prizes Fund" to help cover public school expenses.
Such a short deadline, indeed, almost any deadline at all for claiming lottery winnings, surely meets the "arbitrary, capricious, and unreasonable" standard that invalidates any law. What conceivable difference does it make whether a ticket is claimed within six months, a year, ten years, or fifty years? If someone bought the winning ticket and loses track of it, but eventually does finds it — or his or her heirs find it when cleaning out a house after the owner's death — why should s/he be unable to claim the prize? If the state is able to validate a winning ticket today, it should be able to validate a winning ticket in ten years. Where is the harm?
An account for unclaimed prizes can perfectly well be created in a bank, and overflow into various small banks around the state, to be used as loans for mortgages, small businesses, college tuition, etc., so it does some good immediately. The interest on that money would be paid to the state for the purposes the lottery is intended to serve. In very few cases would any of the prize money be claimed, but it would be there to do justice to the legitimate winner, whenever s/he managed to find the ticket, in those few cases where the ticket is eventually found. And all the while the money would be doing good in the economy and paying interest to the state.
The state legislature could reasonably place a 50-year expiry on lottery winnings, as would allow for the situation I mention above, where a ticket is found only when the heirs to a house are cleaning it out after the death of the ticketholder. A state could even fairly provide that a portion of the winnings is forfeited each year a prize is unclaimed, say 2% a year after the first year, so that the state might eventually recapture the whole sum at the end of 50 years. Moderate measures such as that are defensible. Simply stealing money someone is entitled to is not.
The lottery is unearned money for any state, and has been rightly criticized as taking unfair advantage of the poor, who are more likely than the middle class or rich to spend excessive amounts to take a chance on winning the lottery as the only way they can see to get out of the financial hole or grind they feel themselves trapped in. Some critics, indeed, regard state lotteries as stealing from the poor. I wouldn't go that far, tho perhaps some way should be found to limit how much poor people can spend on lottery tickets (after figuring in winnings). One way that might be done is thru a tax credit on a state income tax for people of specified low income for such moneys as they may have spent on the lottery. To do that, however, we would have to find a way to track such outlays, as by putting on the scannable ticket for submitting numbers a significant and unique identifier, such as, say, the last four digits of one's Social Security number. That would leave enuf of the number unspecified to protect a person's identity but show enuf in a given locality to provide fair certitude of identity for tax purposes. It would also simplify collecting income taxes owed on winnings. Even a tax credit wouldn't work for people who don't itemize on their income tax forms. But society might find some way to lessen the burden on poor people who have a gambling problem.
It is enuf for Government to raise/steal small amounts from large numbers of people by offering them a tiny chance at a dream. It is far too much for Government to snatch away the winnings from people who leave a ticket in the pocket of a shirt they then leave in the garage or a purse they don't usually use, or who forget to check the numbers for a few months. Government is permanent; individual citizens and their dreams are not. Government can wait to take unclaimed lottery winnings, and draw interest from such funds while waiting. There is no harm in Government's waiting. There is vast harm to a winner whose winnings are seized. The legal concept of "balance of hardships and equities" thus demands that Government pay lottery winners whenever they find their ticket.
(The current U.S. military death toll in Iraq, according to the website "Iraq Coalition Casualties", is 4,316 — for Israel.)

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