If enacted, ACA 23 would significantly impact state laws concerning tax on lottery winnings. It would amend Section 19 of Article IV of the California Constitution, thereby subjecting lottery winnings to the same tax rates and administration as other personal income, which may lead to increased tax revenues for the state. This legislation aligns lottery winnings with ordinary taxable income, potentially changing how individuals view and report their lottery winnings.
Summary
ACA 23, introduced by Assembly Member Gray, proposes an amendment to the California Constitution that would allow lottery prizes of $1,000 or more to be subjected to personal income tax. Currently, Proposition 37 prohibits the imposition of state or local taxes on lottery prizes. This change would align lottery winnings with other forms of taxable income, challenging the longstanding prohibition established by voters in 1984. This move aims to integrate lottery winnings into the broader framework of taxable personal income, which could increase state revenue.
Contention
The proposal has sparked debate regarding taxation fairness and the potential economic implications for lottery players. Supporters argue that taxing lottery winnings places them on equal footing with other forms of income, contributing to state revenue, while opponents view this as a violation of voter intent expressed through Proposition 37. Critics worry that subjecting lottery winnings to tax could discourage participation in state lotteries, which are often seen as a form of entertainment and community support.