Lotteries and Window Taxes

February 23, 2006

The excitement over last week’s $365 million Powerball jackpot—the largest North American lottery win in history—makes one wonder what generations past would have thought of cotemporary lotteries.

Although lotteries have been popular in the U.S. for nearly four centuries, they have not always been legal. They were banned in all states for 70 years, from 1894 to 1964, and there has always been considerable opposition to state-run lotteries. Even the fervor surrounding recent jackpots has not drowned out the dissent.

In 1934, when no legal lotteries existed, a report by the Tax Policy League titled “Lotteries—A Mediaeval Throwback” (unfortunately not available online) foreshadowed their resurgence:

We make progress slowly. Discredited institutions of one century, thought to have been permanently abolished after a long struggle, are revived in later centuries and the battle has to be fought all over again.

Once again America is picking up the lottery enthusiasm from Europe. Four legislatures—Pennsylvania, Maryland, Maine and Massachusetts—considered lottery bills last winter and will go into the matter more thoroughly this year…. A Federal lottery to raise $1,000,000,000 a year for veterans’ benefits will be proposed to Congress by Representative Kenny.

The report also describes a plan that had recently been approved by the New York Municipal Assembly to establish a lottery-like membership league, “organized by outstanding public spirited and charitably minded citizens.” Members would pay dues of $2.50 per year and would hold as many memberships as they wished. A board of trustees, appointed by the mayor and serving without compensation, would randomly select officers. Officers would receive salaries paid from the dues and the remainder of the dues would benefit “the unemployed and … other needy persons in the City of New York.”

The report touches on some of the drawbacks to state-run lotteries, including the fact that they are a regressive form of taxation, and ends on a note of sarcasm:

Last week’s deliberations by New York’s city fathers concerning tax expedients … give a rather melancholy picture of the period’s official mentality. The “lottery plan” equally stupid in conception and in form, may be said to have made the picture perfect. Why, if determined on reviving a discreditable past, the Municipal Assembly should not have discussed a tax on windows, doors, furniture or a New York City “octroi” it is difficult to say.


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