We retired Tax Justice Blog in April 2017. For new content on issues related to tax justice, go to www.justtaxesblog.org
How sad. Here’s one story among many about state officials hoping today’s Mega Millions lottery winner is in their state, because, Wow!, that would be some revenue windfall! Rhode Island’s budget, for example, is currently $117 million in the red, and the $23 million tax bill on a lotto winner would help pay for some affordable housing.
This is what it’s come to: 43 states now sponsor legalized gambling in the form of a lottery in order to boost revenues and then drool over the prospect of collecting more taxes from the winner. Each state taxes winnings differently, of course, but any of the 42 states participating in today’s Mega Million game stand to gain some revenues.
This is no way to balance a budget. For one thing, if consumers spend disposable income on lotto tickets, they are forgoing other purchases – purchases that would be subject to a sales tax. So in the end, lotto may prove to be a revenue wash.
For another thing, it becomes a case of diminishing returns as neighboring states introduce new and better lotto games. Then, states either lose business to another state or hit a ceiling for how many lotto tickets a population can buy. That is, as a revenue source, it’s a short or medium term quick fix but not a long term solution. Kind of like winning the lottery.
And did we mention that gambling is addictive, winning is unlikely and it’s not at all in the public’s interest for a government to actively encourage and promote it?
Real public servants level with their constituents about state budget needs. In states like Maryland, California and Washington, courageous lawmakers are doing the right thing and raising revenues the honest way – with taxes.