Each day thousands of people win casino jackpots and lotteries on which they must pay fed tax.Those winnings are exempt from SS and Medicare taxes. Collecting the taxes would be simple and immediate as withholding would be done at the time the winner is paid. Think about the revenue from just one lotto jackpot of 50 mil being won: that would be 3.1 mil into SS and $725,000 into Medicare immediately (I don’t think winnings should be subject to the SS earning cap we have on wages). We have many big lotto winners each week. Every day in casinos people win jackpots that trigger Fed withholding. If SS and Medicare tax were withheld from those it would help to cover the funding shortfall. We all pay these taxes on our hard earned income; why not also pay the taxes on an unexpected windfall?
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