Friday, January 20, 2006

Poor Tax

Kip points out that sales taxes disproportionally penalizes the poor that spend a greater percentage of  their income buying things.  Here are some other “poor taxes.”

Lottery – 41 states now rely on lotteries to supplement their tax revenues, yet those lotteries are mostly played by low and middle income families.

Studies illustrate that low-income people are more likely to play the lottery.

-In Lexington, Kentucky, 79 percent of the money spent on lottery tickets in 1997 was spent in zip codes where the residents’ per capita income was below the $20,274 county average.3
-Similarly, 47 percent of Maryland’s most frequent lottery players come from households earning less than $20,000 a year.4

“Riverboat” Gambling – In addition to lottery revenues, the tobacco settlement and their normal legislatively approved tax rates, states are relying increasingly on gambling revenues to pay their bills.  They rely on them so much that Governor Blagojevich has convinced himself that he can add Keno to the list of approved games that can be played (even though he isn’t restricting the games to casinos or approved gambling institutions) so that he can increase the revenue stream without that cumbersome process of getting it passed through the legislature.

Not only are casinos more likely to be placed near low income neighborhoods, the poor spend a much larger portion of their incomes on gambling.

It may seem to be an odd position for a libertarian to take, getting rid of gambling, but billions of dollars of tax dollars are spent, in essence, to subsidize gambling habits.  If Joe Average can afford to buy scratch off lottery tickets and tokens for the slot machines then they certainly can afford to buy their own food and housing.

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