The poor need help, not hidden taxes

Taxes on cigarettes and liquor hit poor people harder than the rich, but the 'voluntary tax' of state lotteries hits them hardest of all.

from the July 9, 2007 edition

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Those who buy lottery tickets are in effect paying a tax of 40 to 50 percent to the states. Only 50 to 60 percent of the money is paid out in prizes. Casinos pay out 85 to 90 percent of their revenue to gamblers, horse racetracks about 85 percent.

Davis says liberal tax groups in Washington don't seem so bothered by such taxes on the poor. He's disappointed that so many states are promoting their lotteries with videos of happy, smiling gamblers. Given that so many people lose, he observes, ticket-buyers have little reason to cheer.

Another Tax Foundation study, released last week, complains that state lottery agencies promoted Independence Day as a good day on which to gamble. "Star Spangled" games push "regressive, misguided policies."

Alicia Hansen, author of the study, recalls a public opinion survey last year that found 21 percent of respondents said playing the lottery was "the most practical strategy for accumulating several hundred thousand dollars" for retirement. Nonsense, she says. The stock market over 40 years could return, on average, 811 percent more than the same amount of money spent on a lottery, given the odds of winning.

Timothy Kelly, executive director of a 1999 national commission on the impact of gambling, figures that its report may have slowed a bit the spread of gambling in the US. Nonetheless, the gambling industry is "on a roll," he admits. And once a gambling industry, with its ample supply of cash, has established itself in a town, "the local government tends to be subservient."

Further, the spread of gambling has produced about 15.4 million "pathological" gamblers, half of them adults, half adolescents. They, the commission found, tend to engage in "destructive behavior," such as engaging in crime, piling up huge debts, damaging relationships with family and friends, and even – in extreme instances – committing suicide.

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