Massachusetts is the most recent in a long line of states to consider increasing gambling revenue (casino taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. es and implicit lottery taxes) to fill state coffers.
From an Associated Press article titled “State Auditor says casino gambling in Mass. may be inevitable“:
The state’s auditA tax audit is when the Internal Revenue Service (IRS) conducts a formal investigation of financial information to verify an individual or corporation has accurately reported and paid their taxes. Selection can be at random, or due to unusual deductions or income reported on a tax return. or is the latest high-ranking official to get behind the idea of expanded gambling in Massachusetts.
Joe DeNucci tells the Boston Herald that he thinks the state should move ahead immediately with allowing slot machines at Massachusetts racetracks.
He also predicts a full-scale casino will be up and running here in the next three to five years.
The auditor says without slots the racetracks will not survive.
State-run gambling enterprises such as lotteries and video lottery terminals at racetracks exemplify poor tax policy for several reasons: they are a regressive form of taxation, they are not economically neutral (they impose a higher tax rate on some goods than on others), they lack transparency (that is, the revenue they generate is not labeled tax revenue by the government), and government simply should not be involved in the gambling business.
Taxing privately run casinos is another matter and does not pose the same policy problems, although casino taxes are very complex and not neutral–they are higher than state sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. es.
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